Atherton, California has a reputation for wealth and decadence.
It’s also known for its emphasis on privacy.
Because of that, it’s attracted many affluent people to its neighborhoods.
The average household income in Atherton is $526,856.
With a small population of 7,014 recorded in 2020, it’s clear that Atherton tends to attract those who make a certain household income.
If you’ve ever thought of living in the area or wondered why it’s the most expensive zip code in the United States, then there are a few reasons behind it.
Here are 10 reasons Atherton, CA is expensive.
Why Is Atherton California So Expensive? (Top 10 Reasons)
1. Proximity To Silicon Valley
One of the reasons that Atherton became as expensive as it is today is its proximity to Silicon Valley.
Before rich homeowners started to claim the area as their own, Atherton was relatively modest.
Most of the wealthy lived in neighborhoods and suburbs closer to San Francisco.
That was where all the major computer hardware companies were located.
It’s also where most businesses were at the time.
As software started to outcompete hardware, more workers started to move to Silicon Valley to find their wealth.
That meant that they needed places to live that were closer to this particular area.
Atherton just so happened to be a reasonable distance away.
Many of those who moved to work at Silicon Valley came from urban settings.
Tired of living in apartments and tight areas, the newly wealthy engineers and software designers wanted homes that had more acreage and privacy.
Atherton provided both.
As more people came to work in Silicon Valley, more people also started to buy up homes in Atherton.
With a limited number of lots available, this increasing demand made the prices for homes grow more expensive.
That remains true to this day.
If there’s ever a mass exodus from Silicon Valley, then there’s a chance that some of the wealthy might leave Atherton, too.
However, until then, its proximity to Silicon Valley has made Atherton, California expensive.
2. Wealthy Homeowners
There’s no question that the biggest reason Atherton is expensive is that it’s home to the wealthy.
People buy lots containing humble ranches, then tear them down and build mega-mansions in their place.
When the entire area becomes filled with mansions, then the rest of the area becomes expensive, too.
This is because property taxes and rental prices have increased dramatically.
The wealthy bring investments in their local communities.
While this usually means that the area becomes better for it, it also means that everything becomes a lot more expensive.
Those with lower incomes are usually unable to pay the higher property taxes or costs of living in the area.
As a result, they’re forced out of the neighborhood to a different one.
California has laws about neighborhoods needing to provide homes for all different kinds of incomes.
That includes Atherton.
However, Atherton has dragged its feet about how it intends to go about this.
The wealthy likely don’t want lower-income households near them, either, as it can impact the value of their homes.
Atherton is expensive because it caters to the wealthy.
3. Large Parcels Of Land
Another factor that contributes to the expense of Atherton is the size of the land for sale.
Unlike many other municipalities in the area, Atherton has a one-acre minimum for its houses.
There are a few select areas where the lots are smaller, but the majority of lots for sale in Atherton are one acre or larger.
This means that land is scarce in the area.
As more people move there and buy up large parcels of land, there are fewer acres to go around.
Since there’s a lot of demand for the area, the limited supply of land available makes the prices extremely high.
Large parcels of land in California are also coveted because they’re rare.
It’s difficult to find a home in California that has a lot of land so close to important metro areas.
That makes the area even more enticing for homeowners.
They’re able to build large homes or even a compound.
This also makes buying affordable housing difficult.
The very fact that most of the lots are one acre or more means that the area is going to be expensive from the start.
Land prices depend on the size of the lot as well as the location.
The bigger a lot is, the more expensive it is.
Since Atherton requires homeowners to own at least an acre of land, then the price to build there from the start is already high.
Atherton is expensive because they sell large parcels of land and have a one-acre minimum requirement for most lots.
4. Flat Land
The size of the land isn’t the only factor that makes Atherton expensive.
Most of the land that makes up the area is also flat.
This is important in California for a few different reasons.
Flat land is easier to build on.
While this means that building costs will be cheaper than if they were building on a hill, it also means that there’s going to be more demand for that type of land.
That makes buying the initial land expensive.
The house may be less expensive to build because the area is flat, but the homeowners lose out on those savings by having to buy expensive land in the first place.
This flat landscape is also important because of earthquakes.
California is no stranger to earthquakes.
Homes that rest on hills and cliffs are always in danger of collapse.
That’s why many Californians prefer to build on flat ground.
Even if an earthquake occurs, they have a better chance of their house surviving because it’s on flat land.
Atherton has a lot of flat land that is enticing to wealthy homeowners.
They can build large mansions on the land without worrying too much about the complexity of the builds or earthquake damage.
The problem is that although there’s a lot of land, there’s not that much for everyone.
This creates a scarcity of really great land to build on.
As a result, wealthy individuals end up bidding against one another over parcels of land which drives up the cost even further.
If that wealthy homeowner ever decides to sell the home in the future, then they’re going to list the price high to cover the costs they took on when buying it.
Atherton is expensive because it has flat land.
Since the wealthy make up the majority of the Atherton area, some of those wealthy individuals are celebrities.
Anytime a celebrity associates with an area, it immediately becomes more expensive.
That’s because people have an interest in living in the former home of a celebrity.
Since that house has a higher value, the houses around it tend to be higher in value, too.
There are quite a few celebrities who call Atherton their home.
One of them is Steph Curry.
The famous basketball star of the Golden State Warriors lives in a house valued at $31 million in Atherton.
The lot sits on 1.2 acres.
Another famous person who lives in Atherton is Jan Koum.
Born in Ukraine, Koum founded Whatsapp.
Facebook eventually bought it from Koum who then used his extra expenses to build a compound in Atherton.
The land alone has a value of $57 million.
The property stretches across 5.6 acres and has six separate structures on it.
Google royalty also makes its home in Atherton.
The chairman of Google, Eric Schmidt, has a five-bedroom mansion in the area.
He originally bought land in the 1990s for $2 million.
His home is now worth more than $5 million.
While the wealthy have certainly made Atherton an expensive place, it’s the celebrities who are driving up the prices further.
With their influence and fame, it’s making more people want to live in the area.
With more demand for housing and little supply, the prices for the houses increase.
6. Few Building Restrictions
Another reason Atherton is expensive has to do with the loose building restrictions that it has.
California has some pretty strict regulations aimed to make homes more energy-efficient.
They also have certain regulations about how tall privacy fences can be or how thick exterior walls need to be.
In Atherton, those building requirements are a bit more relaxed.
Builders are able to be a bit dirtier with their construction practices.
One of the most attractive qualities of the lax building restrictions is the lack of limits on privacy fences.
In most areas, privacy fences can’t go higher than six feet.
In Atherton, they can be higher.
This is enticing for certain individuals, like celebrities, who value their privacy.
The lax building restrictions also give builders and architects more freedom.
Homeowners looking for unique homes or to beef up their privacy might find the area attractive because of that.
The problem is that this makes the area even more desirable with even more demand.
Atherton is expensive because it has lax building requirements, which makes it an attractive place to build mansions and other types of homes.
7. Private Police
Like other neighborhoods, Atherton, California has its own police force.
The police force in Atherton is a bit different, though.
They almost act as a private police force.
Many of the wealthy homes in Atherton have a direct link to the police department.
If an emergency occurs, then the department gets an automatic call and responds to the situation.
The police also make regular patrols by homes that are empty while their homeowners are away on vacation.
They keep an eye on the area to ensure they’re protected.
This level of security is something that’s highly coveted in many areas.
It’s like being part of a gated community without the actual gate or limitations.
Those with children also find this ideal since it means greater protection for their kids.
They can send them off to school or leave them home with a babysitter with more confidence.
Due to the unique security from the local police in Atherton, the area is more desirable to live in.
As more people who want that sort of security buy up homes, it means the supply decreases even further.
The prices for the homes increase as a result.
Atherton, California is expensive because of its police force and the security that they provide.
Atherton is home to a few different colleges in the area.
The average tuition for college in Atherton is $47,425.
This is far higher than the national average which sits at $18,047 for the year.
The most expensive college in Atherton, in particular, is Menlo College.
Since tuition is high in Menlo, you can expect that most who attend it come from wealthy families.
Because they’re already wealthy, businesses and housing developments around the area know that they can afford high prices.
That impacts the pricing for their services or rent.
Those looking to move into Atherton might find that the area is a bit too expensive for them because of it.
College towns like Atherton tend to be higher in price in general because students often have disposable income from their student loans.
Businesses want to capitalize on this by having slightly higher prices.
Colleges are also very busy areas.
Many serve hundreds of thousands of students.
Those are all students who need food, housing, and entertainment.
That means the demand for those services is often high.
Since college towns are pretty compact, there’s not a lot of space for competing businesses to lay down roots.
As a result, only a few businesses get to serve all the students.
That creates a limit of how much they’re able to sell or how much time they have to give for a service.
With high demand and a low supply, prices increase.
Atherton is expensive because it’s a college town, which drives up prices in the local area.
9. Private Schools
Atherton also has a few private schools in the area.
That’s because they don’t have any public schools.
If families want to send their children to public schools, then there are a few districts nearby from which they can choose.
In most cases, affluent families end up sending their children to private school.
The problem with private schools is that they’re expensive.
Parents have to pay for tuition by the year.
Since schools depend on parents and donors for their funding, tuition prices tend to be high.
That’s because the school uses those funds to pay their teachers, uniforms, bus drivers, staff, and supplies.
Since only a few students attend private schools, the school needs to ensure it has enough money to pay for its budget.
The smaller the student population, the more expensive the tuition.
The benefit of having a small student population is that the students aren’t overlooked by their overworked teachers.
They receive specialized attention that helps them flourish as an individual.
Because private school is expensive, it can make living in Atherton even more expensive.
When you need to pay several thousand dollars for a private school on top of the cost of living in Atherton, then the area might become too expensive.
Atherton is expensive because it doesn’t have any public schools.
It only has private schools, which residents have to pay for every year.
The final reason that Atherton, California is expensive is the continued growth and expansion of mansions.
Whenever someone builds a mansion in Atherton, the values of the homes around it also increase.
This ends up encouraging other homeowners to knock down smaller homes and then build mansions in their places.
That increases the value of the original mansion which then encourages the homeowner to knock it down and build a mega-mansion.
When that increases the value of the other mansions, they knock theirs down and build mega-mansions as well.
The cycle continues with the values rising ever higher.
It’s as though the market feeds on itself.
As long as homeowners continue to build mansions in the area, Atherton will continue to see its property values increase.
This, in turn, makes the area an extremely expensive place to live.
Atherton is expensive because of the number of mansions that are in the area.
How To Save Money In Atherton, California
If you want to visit Atherton or live there yourself, then you may wonder if it’s possible to save money while there.
Atherton is a place where the wealthy live.
As such, if you don’t have a household income to match, then you may struggle financially there.
That said, there are a few things you can do to make your stay in Atherton is a bit more affordable.
Here are a few ways to save money in Atherton, California.
1. Buy Small
Since you’re going to be competing with mansions, the best way to save money is to buy a small home or plot of land.
The further you are from mansions, the more affordable the land is going to be.
Since those homes have a higher value once mansions start to be built next door, you can always resell the small home for more than you bought it.
This might give you enough money to buy a proper home in Atherton.
2. Look For Student Housing
Although Atherton has to have affordable housing as per California’s law, you probably won’t expect it anywhere near the mansions.
As such, you’ll want to look where the student housing is in the area.
They’re going to have the cheapest rates in the area.
Some landowners also convert older student housing units into affordable apartments.
It’ll still be expensive, but it won’t cost you millions of dollars.
Atherton, California is one of the most expensive zip codes in the country.
The large, flat parcels of land contribute to the cost of housing, but it’s the mansions and celebrities that bring a lot of value to the area.
Living here without the same sort of household income is difficult, but if you can find a smaller parcel of land away from the mansions, then you might be able to have a slightly more affordable home.