As a native San Diegan who has lived in or visited just about every state in the U.S., and other countries, personally, I wouldn’t permanently live anywhere but San Diego. Granted, we got our “dream homes” here when things were more “affordable,” so that has some bearing on the issue.
We’ve had many friends who want to move here question the very same things you are questioning. Basically, they are asking, “Why can’t I get what I want, at the price I want to pay?” In your case, around $1M. My response to them is, “If you can get most of what you want here–just enjoy it and live your life!”
If you’d prefer to look elsewhere, that’s great, too. You’ll find pros and cons to each and every location–including San Diego. It’s really all about what’s most important to you and your family.