We live in a moderately high cost of living area. It's an affluent suburb, but we live in the "poorer" part of it, which is actually some of the most economical housing in the whole metro. We have kept our housing costs down to a quarter or a third of a single gross income, ever since we were first married. That's really been the key for us in getting out of debt and keeping me home with the children (and surviving a layoff as well). My husband makes a decent, but not great, income at his job. Our neighbors are mostly families with two not-so-great incomes, so it's pretty quiet (dead) around here during the day.
I actually calculated cost per square foot when we were looking for an apartment--we're home all day and need SPACE, not high-end finishes. We moved much closer to my husband's work, to save on gas and on commuting stress. We took a three bedroom apartment when we only had one child, so we'd be able to stay a few years before we outgrew it (moving is expensive, in both time and money).
Our lifestyle reflects that we've prioritized having children over buying a home or anything else; partly because of our ages. (Running out of time on the biological clock.) With only one income, we're priced out of buying a home here, but it's not where we want to live long-term, anyway.