Yes but looking at Zillow that $2M Bay Area home would go for $250K in Houston TX. In fact, I can't even find homes small enough in Texas to compare some of the houses I see for sale in the Bay...

Do you live in Houston? Yes you can get a home for that in the far flung suburbs, but nowhere near the core city with the cool restaurants and museums Houston is known for. Inside the loop, if you can find houses for ~$300k those are BAD neighborhoods. You need $400k-500k just to leave active active gang violence areas. To be in good neighborhoods you need high 6 figures.

And to your second statement, there are plenty of <1000sqft homes, I'm Austin and in my zipcode they start at $600k.

Much better but not cheap. Houston's median home price is $295 Austin's in $550.