We just moved to San Jose from outside Seattle, family of three living on my husbands low six figure income. It is comfortable, but by no means extravagant. We rent a nice newer home, much like you will find in Morgan Hill. It was a 'find' here in San Jose and keeps him minutes from work. Traffic from Morgan Hill to San Jose is heavy. We preferred to have a shorter commute and be closer to many other things. We will probably homeschool our preschooler as the elementary nearby is fulltime kindergarten and 1000 kids. Just too big and not for us.
Everything here is somewhat more expensive. Preschools I looked at cost 2-5 times as much as our comparable program in WA. We shop at Whole Foods, so I don't see a huge difference there since we shopped there in Wa, too.
Still, it is a beautiful place to live. We have enjoyed no rain or clouds since we moved here in mid-July. It really allows for a more outdoor friendly life with little ones.
Hope this helps a bit!