> They could surely lure talent from the bay area by moving to a lower cost of living area where mid-level employees can afford to buy an actual house relatively close to work?

Nobody wants to take a huge paycut regardless of house prices - there are lots of other things in the world you can use money for (including saving for retirement, if you're practical) that aren't particularly regionally inflated.

The people who've been at successful companies for longest also tend to have been pretty well compensated overall, so ownership of something nearby isn't always so out of reach for them. So your most important contributors are the least motivated for this move. Doesn't seem like a good recipe.