I can't help but think that bubble will burst. In Madison, WI, that house would be less than $200k, and that neighborhood is not sketchy and only has some sort of sketchy apartments a few blocks north. At some point tech companies will decide the pains of recruiting young people away from the coasts will be offset by employees who demand less to have a better standard of living.
Here are the problems: 1) San Fran is a peninsula. That means that there's no way for property values to diffuse in any direction but one. 2) Property taxes in San Fran are fixed at the time of purchase. This has knocked the bottom rungs completely out of the property ladder. It goes down, but it never returns to normal. San Francisco real estate was retarded in 2009, 2001, and so on.