A much more comprehensive read that takes into account the last 40 years, as well as cultural, urban migration practices overall.  

This is a great article by Kim Mai Cutler that stands up to multiple reads. 

A friend of mine who has rentals in Emeryville, knew a 1 bdrm, 700 sq ft, abandoned, stripped, house was going to be auctioned on the courthouse steps.  The house had been vacant for well over a year, all cabinets, and fixtures had been stripped out, all windows broken, and homeless had been squatting in it.  He knew it would probably take 100K to get it up to half way decent condition again.  He went to the steps with his cashiers check of 150K, and was outbid by young kids (under 30) in hoodies that looked like they had just rolled out of bed.  They represented venture capitalists, and were on their cellphones during the bidding process, getting instructions.  These young men had 100K cashiers checks, and he estimates they probably had 20 million between all of them.  They were quite curious when they realized he had seen the house in person, as none of them had seen it, they asked him questions about it.  The bidding war for that house ended with 2 of the kids going at it, until one got it for 430K.

What is going on with this?  Why would VC's overpay so much for a house?  Is the Bay Area so built out that even the worst house is worth this much?

No, there had to be something else going on, like maybe they were buying multiple adjoining properties.

wow ^^ super interesting.  

i'd think a spot in Emeryville is worth at least 430k; that's the state of things.

That's also true: We have a genuine supply problem right now. Housing shortages all over the Bay Area.

More building up, because we've already grown out to the edges.

Actually, the article talks about why the politicians resist the up:

http://techcrunch.com/2014/04/14/sf-housing/