To put it bluntly, housing in San Francisco is scarce, which creates an expensive housing market. There simply is a limited supply of available units. As well as the lack of supply is a dearth of development opportunities. Its location on a peninsula also means new housing is difficult to build. Short supply and high demand means that landlords and home sellers can command higher prices. Finally, a thriving tech industry attracts new people to the area, further tightening the supply and driving up demand.