Silicon Valley is so expensive, people who make $400,000 a year think they are middle class
- The Palo Alto Weekly recently posed the question, "How do you define your social class?" to residents of a ritzy Silicon Valley city.
- Over 80 people living in Palo Alto and earning up to $399,999 a year in income considered themselves "middle-class," according to the survey.
- Residents acknowledged that while they might be rich elsewhere in the country, they cannot afford to buy homes in the Bay Area.
Some wealthy residents of Silicon Valley may be falling out of touch with how the rest of America thinks about money.Advertisement
The Palo Alto Weekly, a community newspaper published in Palo Alto, California, surveyed more than 250 residents of the rich Silicon Valley city in December and January.
Among the questions asked was, "How do you define your social class?"Eighty-one survey respondents considered themselves "middle-class." Their self-reported incomes ranged from $10,000 to $399,999, according to the Palo Alto Weekly.
TechCrunch's Kim-Mai Cutler first spotted the survey results.There is no broadly accepted definition of middle class. It varies depending on the state where you live. Last September, the US Census Bureau released its 2016 American Community Survey, an annual survey that measures various economic, social, and housing data among US residents.Advertisement
People whose household income falls between 66% and 200% of the US median household income can call themselves middle-class, according to the Pew Research Center. By that definition, the middle class had a household income between $39,560 to $118,080 in 2016.In the Bay Area, residents said a different standard of wealth applies.Advertisement
Many Palo Alto residents said they're 'house-poor'
Located in the heart of Silicon Valley, Palo Alto is home to Stanford University and a number of high-tech companies including Tesla, Palantir Technologies, Hewlett-Packard, and VMware.
Residents responding to the Palo Alto Weekly Survey cited the area's chronic housing crisis and high cost of living as reasons for identifying as middle-class instead of upper-class.
"In almost any other part of the country we would be wealthy. Here, we are living month to month," said one survey respondent who self-reported as a member of the middle class.
"Where I'm from, I'd own a house and be in the upper-middle class," said another respondent.Others said they "never want for healthy food or clean clothing" but struggle to cover the basics like child care. One person said both parents work in their family to support a family of four, while a 73-year-old said, "I don't feel nearly as financially secure as I expected to be at my age."Advertisement
The median sale price of a home in Palo Alto hit an all-time-high of $3 million in December. Homes in the Silicon Valley city typically sell for 110% of the list price, and buyers put down 20% of the sale price for the down payment on average, according to real estate site Redfin.According to the Palo Alto Weekly, 75 survey respondents considered themselves "upper-middle-class," with incomes ranging from $50,000 to $400,000. Only 17 people considered themselves "lower-middle" or "working class," with incomes falling between $35,000 and $349,999. Eighty-nine people declined to answer the question or wrote in different replies.As home prices continue to climb in Silicon Valley and the cost of living rises, some self-identifying "middle-class" residents may be justified in their claims. Advertisement
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