Historical reasons and network affects. Consider that even more than ever there is a small group of people at the top of the pyramid. And they and other hangers on want to be close to the action.

And seriously that zone along the coast range up the peninsula is a really sweet spot[1]. If you and your associates have to be somewhere it's really hard to beat. (not so nice for the middle class couple trying to buy a house where the schools are still good, or the guy commuting from Tracy)

[1] Los Gatos all the way up to Woodside. Also check out Danville CA on the other side of the Oakland Hills.