I sympathize with you as a lifelong Californian (grew up in Sacramento, educated in San Luis Obispo and Santa Cruz, working in Silicon Valley). I love the desirable coastal parts of California (basically anything from Sonoma County all the way down to San Diego). If money weren't an object, I'd own a home in either Aptos or Pacific Grove. I currently rent in Capitola, and it's the best place I've lived in California. I love the tranquility of the town while having somewhat easy access to Silicon Valley and its amenities and opportunities. However, I simply don't make enough money to purchase a home near the coast unless I move to Humboldt or Del Norte counties, which are far from any urban centers.

Unfortunately with the exception of Sacramento (which is getting pricey as of late) California doesn't have a lot of middle ground between its really desirable yet expensive places and places that are affordable but less desirable. The Sacramento area seems like a reasonable compromise for me. I can comfortably afford Fresno's and Bakersfield's nicest suburbs, but I don't know if I'd be happy in those cities. Much of the rest of the state is quite isolated from major metro areas; this has implications regarding educational opportunities for children and health care quality and availability. I don't see myself settling down and raising a family in many of California's more isolated areas due to this, though it may be a nice adventure visiting these isolated areas for recreation.

I don't know what I'm going to end up doing....maybe I'll end up marrying a woman from Vermont and end up moving there in a few years XD. But I completely sympathize with you and the crazy housing market we're contending with.