I'm glad to see your question, because I'm asking similar questions! The housing market seems prohibitive for a family to move to the area, especially for someone who wants to keep their family as their main priority.
Have you looked south, to Morgan Hill or Gilroy? That's a longer commute, but it seems like you can get more for your money. And many companies offer shuttles so you can at least avoid some of the traffic pain.
I've also read that the housing market is very competitive, and there are many offers on houses. So if you look for real estate and find things you might like, that doesn't mean you'll get it. You may end up settling for what's left over after the cash buyers with offers 10% over asking price have cleaned up the good stuff.
If I were single or even young and married with no kids, I'd make the move in a heartbeat just for the sense of adventure and to see what happened. With kids and a family (especially kids in middle school), it's not so easy. It's important to settle somewhere good on the first try and not risk moving around a lot. It seems very daunting to find a place to live, with good schools, a safe and nice neighborhood, with a commute that is doable, and a house that isn't a million dollars.
I guess you can't have it all.