Yes, it's funny that so much of the mainstream discussion around housing in the Bay Area focuses on the wealth created in the tech industry when much of the eye-popping housing activity has actually been driven by foreign buyers.
When it comes to the prices these buyers are willing to pay, it's incredibly important to understand their motivations. Many of these foreign buyers are not buying houses in the United States as "investments" in the traditional sense. Instead, they are using houses as stores of wealth because they are acutely aware that their capital/assets are at risk in their home countries. In other words, a house in San Francisco may be more secure than a bank vault in, say, China, as far as wealth preservation is concerned.
American buyers competing for assets that have appreciated rapidly in value in recent years due to foreign demand, and who may be far more sensitive to the potential for gain or loss, should at least understand this.