I'm lucky to enjoy living in Memphis, TN. Various reports put the median house price between $73,000 and $99,000, which seems about right based on my experience. Avg income reports range from about $39,000 to $46,000. Luckily, salaries for developers and engineers is roughly consistent with national averages, and sometimes higher due to unmet demand, which obviously sits well in this housing/income market.
There is also an increasing amount of state and local funding for startups and entrepreneurship, and with it a growing amount of programs to foster startups and small businesses and connect them with VCs. I've interviewed with several companies, small and large, in the valley and bay areas, but I've always found the absurd cost of living and crowded population to be a turn off. All that is to say, I wonder if the disproportionate costs and perceived lower-quality-of-life (to outsiders) will slowly decrease the centralization of tech startups in the valley. Perhaps it is a question of when, not if...
Sources:
http://www.homeinsight.com/home-value/tn/memphis.asp
http://money.cnn.com/magazines/moneymag/bplive/2011/snapshot...