Define best engineers first. I seriously doubt that hiring in SF will give you the best engineers, it might have one of the best ratios of good:bad engineers compared to many other places but it's not a given whatsoever that hiring one living in SF will be a slum dunk. I worked with many terrible engineers from SF over the past 20 years.

Which makes the point: why would a company pay such a premium on hiring from a single location if, in the end, it can only get the best engineers from there if it pays an even higher premium than the ridiculous salaries from the place? It doesn't make much financial sense, seems to be mostly based on "feelings" during hiring, like yours.