San Francisco housing: Time for a correction?

San Francisco is arguably one of the hottest real estate markets in the nation. Fueled by the technology economy, it has a limited supply of homes for sale, which has resulted in fierce competition and sky-high home prices. Rents also have grown in tandem.

"Have things cooled down a little bit? Yes. However, the properties that are still priced right and properly prepared, it's a 10-to-12 day market," said Jeff Salgado, a partner with McGuire Real Estate.

San Francisco Skyline, San Francisco
coolbiere photograph | Moment Open | Getty Images

San Francisco home prices were up 9 percent in August year-over-year, according to the latest S&P/Case-Shiller home price indices. That's down from double-digit annual gains in July. It was one of only three of the top 20 U.S. markets, however, to see a monthly price decline, and it saw the largest decline, down 0.4 percent from July.

"It's their comeuppance," declared Nobel laureate Robert Shiller, co-author of the indices on CNBC recently. "They were the most bubbly city. It's time for a correction."

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Sales in the Bay Area fell in September, down 1.8 percent from July but up 4.2 percent from last year, according to CoreLogic DataQuick data. Prices may cool a bit, but not by much, simply due to the fact that San Francisco is a city of perpetually limited inventory.

Its economy is also incredibly strong, compared with the rest of the nation, so while the sky may not be the limit for prices, they will likely continue to be sky-high.

"I don't see a bubble. Our industry is driven by the high tech and biotech. I do not see that economy, the local economy, going down," added Salgado.

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