Expect to pay a premium that is commensurate to real estate prices, then advertise that premium. You'll find people.
If you refuse to pay that premium, nobody will move from other cities, so you're fighting for local talent.
If you refuse to even post your salary range, nobody who knows Seattle real estate prices and has wasted time interviewing for Seattle positions before, will even bother applying. That is the case with me.
I have personally turned down offers in Seattle for being too low, as have other engineers I know. These days I would have to be very excited about a position to bother responding if it didn't list salary, because my assumption is that it's too low to list - so "we don't list the salary" is not necessarily the same as "we know that our salary isn't what's limiting our applicant pool".
Indeed, if 'Z' is not lower than average, then they shouldn't be having so much trouble. And if it is lower, then that is exactly the H1B fraud people are complaining about in this thread - paying below the prevailing wage.
When I do basic salary surveys, companies in Seattle appear to be paying market rate. Early stage, and pre-funded startups typically don't, but most other companies do.
The salaries don't compare to Bay Area salaries (but they are up there), but that is because our housing options are much more affordable.
The feeling I get is: Bay Area engineers don't want to move to Seattle, and Seattle engineers don't want to move to Bay Area, unless the comp is significantly above market.