F
235%
Overall NAT. AVG.
8%
Goods & Services NAT. AVG.
743%
Housing NAT. AVG.
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Date & Last Updated: This data reflects 2023 and was released from C2ER in January, 2024; this is the most current data available.
The cost of living index is based on a national average of 100. For example, if the cost of living is 90, then it is 10% lower than average. If the cost of living is 110, then it is 10% higher than average. The breakdown for each index is as follows: goods & services (33%), groceries (13%), health care (5%), housing (30%), transportation (9%) and utilities (10%). If the cost of living data was unavailable for this city, estimates based upon nearby cities were used.
Index Palo Alto California National
Cost of living335140100
Goods & Services108111100
Groceries115112100
Health care123109100
Housing843196100
Transportation130126100
Utilities132127100

An Overview of Cost of Living in Palo Alto, CA

Understanding the cost of living in Palo Alto can help future residents assess whether their current financial situation aligns with the expenses they will encounter. It enables them to plan for potential changes in their budget and lifestyle. The Palo Alto cost of living index is 335, which is 235% higher than the national average. The cost of living index is calculated by taking into account multiple categories, which encompass both the cost of everyday expenditures and larger expenses as well.

If affordability is among your top priorities when searching for a new place to live, this area may not be the ideal fit, as the cost of living in Palo Alto is among the most expensive in the United States. Just a minority of areas exhibit a cost of living at least 20% higher than the national average, and unfortunately, Palo Alto falls into this category, which may not align with your goal of finding a budget-friendly living environment.

Housing costs significantly influence the Palo Alto cost of living index, typically accounting for a substantial portion of one's post-tax income. Regrettably, within this particular region, expenses related to both residential ownership and renting exceeded those observed in an average city by 742.7%. This entails elements such as housing and rental prices, mortgage interest rates and insurance costs.

The relentless increase in grocery prices is a noteworthy trend. In the last two years, grocery costs have experienced an upward trajectory of over 10%. Unfortunately, Palo Alto is no exception, where grocery prices are 14.5% above the national average.

What Do Locals Say About the Cost of Living in Palo Alto?

When it comes to knowing a city, its residents are the experts. We conducted a survey with 11 locals to understand their opinions on the cost of living in Palo Alto. The results indicated that 45% found it reasonably priced with decreasing prices of goods and services, while 55% viewed it as quite expensive, with increasing prices.

Is Palo Alto Affordable?

Is Palo Alto affordable? It's a key consideration when pondering a move, as affordability often shapes your choices. The cost of living index (we discussed it earlier), coupled with housing costs and income levels, serves as the cornerstone for determining a location's affordability. Take Palo Alto, for instance, where the median home price falls 982.8% higher than the national average, and monthly rent rates are 182.3% higher than usual. Additionally, median income levels contribute to the equation, with Palo Alto flaunting a median household income of $174,003, 214.5% higher than the national norm.

What Factors can Influence the Cost of Living in Palo Alto?

Subsidies: Certain cities or states may implement government subsidies or assistance programs with the goal of alleviating the cost of living pressures on their residents. These programs encompass a broad spectrum of support mechanisms, including Medicare, Medicaid, housing subsidies, low-income home energy assistance programs, school lunch programs, supplemental nutrition assistance programs, student loans, electric vehicle tax credits, affordable care act subsidies and farming subsidies. Areas offering fewer subsidies may experience a rise in their cost of living.

Healthcare: Healthcare expenses and insurance premiums can vary significantly depending on the specific city or state. Factors such as accessibility to healthcare facilities, out-of-pocket expenses for doctor's visits, dental care expenses, prescription costs and specialized medical care fees can all influence the overall cost of living. In Palo Alto, healthcare costs are 22.6% higher than the national average.

Transportation: When public transportation options are limited or non-existent, residents frequently resort to vehicle ownership, which can significantly contribute to the overall cost of living. Monthly financial obligations encompass fuel, insurance, regular maintenance and potentially lease or financing expenses. In Palo Alto, the transportation index is 30.4% higher than the national average.

Where is the Data From?

The cost of living in Palo Alto, presented above is derived from the C2ER cost of living index, offering a practical method for assessing living cost disparities in urban areas. Published quarterly, this index compiles data from more than 300 independent researchers, encompassing over 60 goods and services in 6 categories. The weightings assigned to cost variances are informed by government survey data tracking the expenditure patterns of professional and executive households. It should be noted that the C2ER index does not include data on sales or income tax rates, however, AreaVibes incorporates tax rates into the overall cost of living score for each area.

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Cost Of Living Quick Facts

  • The cost of living in Palo Alto is 140% higher than the California average
  • The cost of living in Palo Alto is 235% higher than the national average
  • Palo Alto housing is 743% higher than the national average
  • California general sales tax is 42% higher than the national average
  • California state income tax is 61% lower than the national average

Most Affordable Places to Live in and Around Palo Alto

See all the best places to live around Palo Alto

Compare Palo Alto, CA Cost of Living

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      Salary Calculator

      This is how much you would need to earn in
      Price difference in compared to
      Cost of living index
      Goods & Services index
      Groceries index
      Health care index
      Housing index
      Transportation index
      Utilities index

      Median Income & Debt-To-Income Ratio

      Median Income Per Year Per Month Max Budget (28% DTI) Max Budget (36% DTI)
      Owners$227,987$18,999$5,319$6,840
      Renters$130,979$10,915$3,056$3,930
      The percent of monthly income spent on housing can be a good indicator of the affordability of housing in Palo Alto, CA, as well as the overall cost of living. As a general rule of thumb, the debt-to-income ratio (DTI) for homeowners or renters should be not more than 28 percent of gross income to be spent on housing related costs and not more than 36 percent of income on all expenses, including debts. The median income for Palo Alto homeowners, is $227,987. This would allow for a maximum of $5,319 per month to be spent on housing costs. For renters, the median monthly income is $130,979 which would result in a maximum of $3,056 to be spent on rental costs.

      California Sales Tax

      State General Sales Tax With Max Surtax
      California 7.25% 10.5%

      California Income Tax

      State Income Tax (Low) Income Tax (High)
      California 1% 13.3%

      Goods & Services

      Item Palo Alto National avg. Difference
      Haircut $33.94$24.2639.9%
      Beauty Salon $48.51$45.566.5%
      Toothpaste $3.72$3.700.4%
      Shampoo $1.66$1.2829.9%
      Movie $13.31$12.139.7%
      Bowling $33.30$18.0085.0%

      Groceries

      Item Palo Alto National avg. Difference
      Ground Beef $5.79$5.840.8%
      Fried Chicken $2.13$1.5735.7%
      Milk $5.05$4.678.2%
      Potatoes $4.77$4.933.4%
      Pizza $14.92$12.0923.5%
      Beer $10.99$10.415.6%

      Health Care

      Item Palo Alto National avg. Difference
      Optometrist $158.95$125.6826.5%
      Doctor $194.05$135.7842.9%
      Dentist $147.78$113.2930.4%
      Ibuprofen $11.51$10.658.1%
      Lipitor $390.15$468.6016.7%

      Housing

      Item Palo Alto National avg. Difference
      Home Price $2,000,001.00$184,700.00982.8%
      Avg. Mortgage Payment $8,581.10$2,346.69265.7%
      Apartment Rent $2,679.00$949.00182.3%

      Transportation

      Item Palo Alto National avg. Difference
      Gasoline $4.81$3.4638.9%
      Tire Balancing $65.62$59.929.5%

      Utilities

      Item Palo Alto National avg. Difference
      All Electricity $294.74$193.9951.9%
      Phone $190.07$192.251.1%
      Although the cost of living data is updated regularly, this cost of living information is to be used as estimates only as prices can change on an ongoing basis.

      Nearby cities with low cost of living

      City Population Cost of Living Index National Avg.
      Loma Mar, CA28211716.8%
      Mountain View CDP, CA2,58513030.1%
      Union City, CA75,06719898.4%
      Newark, CA48,14819797.0%
      La Honda, CA1,229203103.5%
      Palo Alto, CA67,973335234.6%

      Cities with similar population

      City Population Cost of Living Index National Avg.
      Redmond, WA67,95919291.8%
      Gaithersburg, MD67,87813838.0%
      Palatine, IL67,87511717.0%
      Union City, NJ68,07313635.9%
      Yorba Linda, CA68,10319897.6%
      Palo Alto, CA67,973335234.6%
      Date & Last Updated: This data reflects 2023 and was released from C2ER in January, 2024; this is the most current data available.