Let’s compare two counties: Nassau County (outside of New York City) and Santa Clara County (you know where that is!)

First, a quote from the WSJ about Nassau County:

WSJ.com – Mixed-Use Project Aims to Revitalize
Nassau County, which stretches just east of John F. Kennedy International Airport to the less densely populated Suffolk County, is home to about 1.3 million residents. In 2005 an estimated 17.5% of Nassau County households — or 78,816, the seventh-highest county total in the U.S — had net worths of $1 million or more, excluding the value of their primary residences, according to a division of TNS, a London-based research firm.

Nassau’s median home price rose in December to $482,000, well above the national median of $213,000, according to Moody’s Corp.’s Economy.com. Nassau’s employment level fell in June by 0.1% from a year earlier compared with the national gain of 1.5%, according to the Bureau of Labor Statistics’ most recent data.

Nassau County has the 7th highest number of millionaires, and the median home price is $482,000.

So where is Santa Clara?  The median home price is $670,000
- $188,000 more than Nassau. Actually, a more fair median home price for Santa Clara would be $740,000 as most homes in Nassau are houses. That makes the delta $258,000 – a quarter million.
Well the answer is here:

Report: Number of U.S. millionaires reaches record – Mar. 28, 2006
The millionaires next door
Ten counties across America with the highest number of millionaire residents.

Rank County No. of millionaire households
1 Los Angeles County, CA 262,800
2 Cook County, IL 167,873
3 Orange County, CA 113,299
4 Maricopa County, AZ 106,210
5 San Diego County, CA 100,030
6 Harris County, TX 96,593
7 Nassau County, NY 78,816
8 Santa Clara County, CA 75,371
9 Palm Beach County, FL 69,871
10 Middlesex County, MA 67,552

Bottomline: Santa Clara has fewer millionaires (especially by %), but has a median home price that is $258,000 more than Nassau County. And according to most cost of living calculators, the basics are more here in Santa Clara as well.
So does it make financial sense to live in the Silicon Valley?

Well, I guess you can’t put a price on sunshine.

So on Friday, we looked at a house that was at $696k for 2370 square feet… in near Microsoft HQ. Let’s look at what the same amount of money will get you near Google HQ/Intuit/Microsoft in Mountain View…

MLSlistings Property Detail for MLS number 617256
490 THOMPSON AV
Mountain View, CA 94043

$689,000

This Single Family Residence has the following features:
MLS#: 617256 Approx Age: 52 Years Approx Sq Ft: 1137

Quite the comparison, wouldn’t you say?

Some New Math on Homes – New York Times
Their findings are at odds with other surveys that use the relationship of home prices to income to determine whether home buyers are overreaching. Homes in Orange County, Calif., were fairly priced, the Smiths found. Some cities like Dallas, Indianapolis and Atlanta were screaming bargains. Homes they surveyed in San Mateo County, south of San Francisco, were, however, overpriced by about 54 percent.

In a paper the two presented at the Brookings Institution this week, “Bubble, Bubble, Where’s the Housing Bubble?” they said that even though prices had risen rapidly and some buyers unrealistically expected the trend to continue, “the bubble is not, in fact, a bubble in most of these areas.”

A fascinating read, until this part:

Those expectations are far too optimistic, numerous studies have shown, most notably a 2003 study by Mr. Case and Mr. Shiller that found, for instance, that homeowners in San Francisco expected annual price increases of 15.7 percent. “It’s clear a lot of people are nuts,” Mr. Case said.

Uh, hello, this is the Bay Area. Being nuts is a way of life!