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I was surprised that Palo Alto didn't make the top 10. Then I noticed that this survey is based on the average home price, not the median price.
The title says "Silicon Valley is the most expensive place to live." The actual data presented is "Silicon Valley is the most expensive place to buy a 4 bedroom, 2 bath house" which doesn't conclude it's the most expensive place to live.
This seems to be based on the average of sellers' asking prices, and the source report doesn't give its raw data anywhere. But if you click the source's "Show me listings" button, the median price for a 4 bedroom/2 bathroom house (after stripping out > 4 bedrooms and > 2 bathrooms) in Saratoga seems to be in the whereabouts of $800ish, with Mc Mansions skewing the mean up.