Depending on where you live, $70k may easily match the spending power of 150k in the valley.
Now you're making a rate calculated for people living in those million dollar starter homes, but with <$1k/mo in real expenses. Take that back to Iowa and live like a Corn Star for the rest of the year, then repeat.
I used to do just that, substituting LA and [random 3rd world beach], and I'd always manage to add a good amount to the retirement fund each year, even after 9 months off.
I think the calculations assume you intend to live there permanently; if you don't, a large investment in a home is irrelevant. I think this factor is what makes it possible for so many to come work on visa for less than a citizen would make: they intend to go back to their lower cost location with money in the bank.
Also, as software engineers, the value we create isn't as localized as it is in many other professions. This fact doesn't account for too much, but it also means our salaries shouldn't be linearly bound to cost-of-living.
On another note, I'm glad to see demand for developers result in some increased salaries. We've been hearing much about the Google/Facebook recruiting wars in this regard. Salaries dove and stagnated after the last recession, albeit it was a radically different situation in nature.
On a sidenote, to add something on-topic: So a fresh graduate (with a strong resume, granted) in Seattle makes 130% of my 5 years experience salary in one of the biggest cities in Germany. I cannot believe the cost of living is that much higher, so - wow, I'm impressed.
Well, let me put it this way: I lived in Seattle for nearly a decade, and while it was expensive, my rent was less than half of what I'm paying now. I could live in my own apartment on a graduate student stipend (~$30k), and still save a bit each month. There's no way I could do that here.
It's tough to overstate the cost of living adjustment that's necessary to move to the bay area. It's insanely expensive.
2. If you feel are really good, compared to your peers, than you:
1. Might actually be good (then start your own thing).
2. More likely are suffering form the big fish in a small pond syndrome. If you come in the valley, you will find out they you may be just merely average at best.
I thought I was really good at some point, but I got "schooled" really fast after moving from Boston to SF. But if you really want to work with the best of the best, come to the valley for few years. You can still go home after it, and have a huge competitive advantage vs. your peers that never left.
http://about.salary.com/costoflivingwizard/layoutscripts/col...
So, to live the same quality in silicon valley requires $170K rather than $100K in KC. However, supply and demand is vastly different for tech (see indeed.com).