A guy I know in "The Valley" is paying $80K a year on housing. To Rent. That is about what my house is worth. His employer, in order to keep him, is debating buying the apartment complex, kicking out the non employees and making his housing a perk of the employment contract. And yet one more reason for me to never move back to California gets added to the list.
The sadly enjoyable thing to watch is what happens when all the service people can't live and work in the same city and have to leave. There are a thousand service jobs that need to be done and done well every day else a city stops functioning. Everything from the teachers, to the police and EMS to the guys who pave the streets to the guys who monitor and repair the sewers. Then you get into the service industry: bartenders, waitresses, the guys who stock the store shelves overnight etc. All these jobs are not going to earn 100K a year, no matter what the housing market. How many of these people, with 'traditional' skills, are going to start looking at their situation and say "Fuck everything about this shit" and leave? There are almost 40 million people in California. If 10% of them leave like what happened in the first dot-bomb in '98, where are they going to go and what are they going to do?
I left in '98. I was making $75k/yr working for Sun Microsystems in Silicon Valley, and I lived in the Haight Ashbury where the rent on my one bedroom apartment with parking was $2200/mo. I was comfortable, but definitely not saving anything. I can't imagine what it must be like there, now, almost 20 years later. San Francisco is 7 miles square. There is no more land. Period. It's like Manhattan, but with higher paying jobs. The future of that city/area is going to be fascinating/horrifying to watch.