JG,
Not sure if you’re aware, but the Bay area (Silicon Valley up to San Fran) has a much higher concentration of F500 companies and high paying jobs than SD, LA or OC. Menlo Park may not appear to be anything special, but that place is dripping in money (and right next to Stanford and Palo Alto). Ever heard of Sand Hill Road? That’s the VC nerve center of the world. Almost $8 billion of VC money flowed to Bay area companies in 2005, more than the next 11 US tech hubs COMBINED.

The average Bay area household with 2 degreed professionals brings home $300-$750K annually, juding anecdotally from the folks I know who live there. Next to Manhattan, it’s the highest paying region in the US. There is a much higher floor under the prices up there as they’re supported by high wages (and very plentiful jobs – more jobs than qualified applicants).

Do a spin through Zip Realty on the nicer Bay area towns, and then comapre to SD or OC. It is eye-opening. Example: Palo Alto currently has ~30 listings, while Newport beach has more than 700.