It is instructive to think about those 'other things' -- because each person will value those in different ways.
To some people, a smaller house is a good tradeoff if it comes with abundance of extremely awesome restaurants, shopping, and riverside parks nearby. For others, having a big personal space is more important.
Some people get a lot of satisfaction from having a Porsche or (more likely, with kids) a well-appointed Audi Q7. I think the best car is not having a car at all (at least until the robo-cars arrive) -- but to me that means public transit + bicycle is literally so good that I can get where I am going faster than I could with a car. The only cities I have lived in where that is true are Tokyo and Amsterdam.
So yeah, depending on what you value most, you might be better off in Tokyo even on $120k. But if you want the car and big personal space, then probably not.