There are plenty of areas around the Bay Area that meet your requirements. First, let me clarify that a 1 hour commute during the peak of rush hour would get you about 15 miles from Milpitas. That puts you into some older neighborhoods in Fremont, Sunnyvale, and San Jose. Homes are generally about 40-50 years old and in the 1200-1600 sqft range with 3 beds and 2 baths.
If you can commute during off-peak hours, you can get to Tracy and Livermore in 34-45 minutes. Both have newer (5-10 year old) single family homes in the $250-$350K range, with homes up to 2500 sqft. You can also get similar deals along the coastal areas of the east bay, like Hayward, San Leandro, or even Union City for slightly older homes. Down south, you can hit Morgan Hill in about 30 minutes. Or, if your commute time is very ideal, you can make it down to Gilroy in 45-55 minutes and get a single family with a small ranch.