Yup, I know this story well. My cousins grew up in San Jose and about 8 years ago as one grew up, got married, and had kids her and her husband bought a 3 br 1 ba 750 sq ft shack for $900k which I thought was outrageous. A few years ago during the frenzy they sold it for $1.4M or so -- all cash offer -- and bolted to Reno where they built a 5,500 square foot palace almost in all cash.Its a really tough place to move to and get a foothold in real estate, but there is a flipside. I know plenty of people who have lived in the Bay Area for years, who bought homes in the mid 2000's and got a 2000 sq ft place for $500K or $650k or something that seemed outrageous at the time, but those homes are now worth $1.8M or more. So they are equipped to pull the plug and bolt with a nice nest egg stashed away, or to ride it out with mortgages that are manageable, especially while they are now being paid wages commensurate with the current cost of living there. When housing gets super expensive there are going to be winners and losers in every transaction.
I had a similar offer and decision to yours a few years back, and I was lucky enough to dodge it entirely and stay where I was (in Fallbrook) and work out of the corporate Oceanside location, so the commute is manageable (25 mins) and I kept my big ass house and reasonable mortgage. If I had to move to the Bay Area today, I'd be 100% effed.
Think I'm going to move this whole convo to OT now since we've jumped the shark a bit on the thread