$1.5m @ 2.50% yielded a ~$6k/mo P&I payment last year
$868k @ 7.25% yields a ~$6k/mo P&I payment currently.
The price of this theoretical home need to drop ~40% to result in the same monthly payment. Home prices won't drop until people are forced to sell and widespread layoffs are just the catalyst necessary.
But just like any market the prices may not be connected to those fundamentals. It depends on expectations.
But yes, the perfect storm was always going to be rates going up and a recession and if this isn't the perfect storm then what is. Well, my house is up 40% since I bought it exactly two years ago so I think I'll survive (I knew I was taking some risk). [EDIT: Not in the Bay Area]
Outside of SV, I expect you'll see such a drop.
Point being, if most of those cash offers are really a 30-year mortgage in a trench coat, the peninsula might slump very quickly in the near future.