The median home price in San Francisco reached the much higher price tag of $905,000 in November, according to the S&P/Case Shiller home price indices.
"December feels slightly breakneck, there are fewer deals to be had but we are seeing substantial overbidding," a San Francisco realtor told CBS News.
The upward trend in San Francisco home values is mainly driven by high-paid tech employees working for companies like Twitter, Google and Facebook in Silicon Valley, with average wages between $150,000 and $300,000 a year.
Affordability in the city's housing market is increasingly becoming a topic of heated debate with much backlash for the city's Mayor Ed Lee. The mayor offered tax breaks to Twitter to move 800 workers into a headquarter near the city's center, CBS News reports.
The price run-up is forcing longtime residents out of the market, analysts say.
Even if tech companies are not headquartered in San Francisco, the employees are choosing to live there, and in some cases enjoying transportation provided by the company.
Tech-giant Google runs a fleet of buses every morning carrying workers to Silicon Valley 40 miles away.