Have you considered PMI in you calculations here? If you're not putting down 20%, PMI on a 700k house at 0.5% (which may be conservative) is $3500 a year, or an extra $300 a month. So if you waited a couple years, put $60k down, got a killer rate (4%), you'd still be looking at a monthly payment of $3,850. $3055 mortgage + $300 PMI + $300 property taxes (conservative, calculated at 0.5%) + $200 home insurance... all which could be on the low side. As is, that's almost 40% of your salaries.
To avoid PMI, you'd have to have 20% down (140k), which at you savings rate, would be 5 years. That's not even taking into consideration the cost of homes going up in the area, and the cost of repairs to make it move in ready.
Some places it really does make more sense to rent than own. Are there no surrounding communities to move to that are cheaper?