Here, have an Indignation: http://www.youtube.com/watch?v=EtCiP8B2xpc#t=7s
In the long term, Silicon Valley and SF is eating its young. It's a city built on young entrepreneurs coming there and doing new stuff, but if nobody who hasn't already made it can afford to live there what happens then? The other problem is that these high costs soak up everyone's spare time and money, leaving them with the requirement to work like crazy for other people to afford to live instead of on their own innovative projects. It sucks away the marginal "play time" when innovation really happens.
Someone said to be about Austin, "everyone in Austin does 3 things". There's something to that. For just one example, Austinites aren't afraid to work for the enterprise or in something less sexy than local/mobile/flavor-of-the-month because you're not expected to go all-in on one job at a time (then burn out after 14 months and replaced by another chump). This creates the cross-pollination and breadth of knowledge that generates innovation.
Bay Area people are terrified to go anywhere near an unsexy industry because they live in a culture where your job is all you do. In Austin, where 9-to-5 seems to be more tolerated, people are more willing to explore unsexy problems and hear people out in other industries-- and you learn a lot from that.
San Francisco and New York seem more fixated on a "do one thing, go all-in, and do it very well" ideology of work. That's fine after you have some good ideas but it's terrible at generating new ideas. You need the more relaxed, open approach when you're young and getting ideas (plus learning from other peoples') is more important.