Furthermore, I believe that the "levels" of perchlorate in the Morgan Hill water is definitely safe. And recent water tests have found "no detection" at various well sites. Here's a link: http://www.morgan-hill.ca.gov/index.aspx?NID=587
Ultimately, the decision is yours but having family that lives in Morgan Hill, I believe that the water is completely safe for consumption.
The Perchlorate contamination site is located at Tennant and Railroad (south Morgan Hill, west of 101) and the plume primarily affected underground water supplies south of the site, especially in San Martin and north Gilroy. Unfortunately Perchlorate contamination is very common throughout the US including the great Colorado River.
There is a great deal of information online about the health threats and each year the city (or water district) sends us residents a water quality report card. According to the experts, those most at risk are infants and pregnant mothers and the concern is Perchlorate's effect on the thyroid gland. As a concerned parent, I use replaceable filters for drinking water in our home.
Good luck with your search!
Broker-owner / Realtor
Your best defense here is knowledge. By simply entering 'perchlorate' into google, you are going to get plenty of info on the subject.
I had to make the same decision you are contemplating and decided that the issue was manageable enough by using bottled water for drinking. We use it for everything else. Frankly, I know folks who have been drinking the local water for decades and I have not heard of any issues. If it were just me, I would probably just drink the stuff - but with 3 little boys, I wanted to err on the side of caution.
Hope that helps in some way. It seems like there is always "something" to get concerned about in any area. I would not let this put you off of Morgan Hill.
Here is a link. Your agent may not be brushing it off as so much that perhaps it is not in their area of expertise. Agents do not know EVERYTHING but they should be able to direct you to those who know.
Agents are to give real estate advice, not inspections, legal, tax, or other areas where others are licensed to provide the information.
I hope you find this link of value.