Real estate prices, as with all other assets, are a function of supply and demand. In the case of San Francisco, supply has remained relatively constant (due to stability in the housing stock) and demand has increased.<p>Without looking at the data, I&#x27;d imagine the recent explosion of the technology industry in the Bay Area has been the largest driver of demand for houses. An increased number of people moving to the area for employment will naturally increase the demand for houses.<p>However, Fed policies also contribute to the demand for housing. As the Fed has kept interest rates close to 0%, it is much easier to finance mortgages for houses, so the housing becomes more affordable (when considering amortization). Additionally, these policies have also driven investment into higher yielding assets, such as equities, in search for greater return. This has had the effect of increasing many individuals&#x27; wealth, making them more capable of purchasing houses.<p>With increases in the ability to pay for housing (assuming housing is a normal good), there will be an increase in demand for housing.