I presume there won't be an adjustment based on which specific city you're living in but more based on the general region. The Bay Area will likely have the same salary band all around regardless if you're in Oakland or Palo Alto. After all - once you do that then where is the line drawn? For instance, some areas of Palo Alto are much more expensive than others.

Maybe they should start scaling based on how much rent you have to pay. ;)

This is an extremely important point. Everyone will rush to the cheapest part of the most expensive areas.

Well, living with your parents is, of course, going to save you a lot of money. But you're living with your parents. I do wonder about the opportunity for fraud, though. I bet a lot of young developers will, all of a sudden, start living in their parents houses.