The same companies that overpay for real estate over pay for talent which has ruined the rental market for residential housing in these areas. Many who want to stay in this area as residents face the same problems of low vacancy and high rates which in my opinion has led a lot of talent not employed by these companies to SF. Not "quality of life" but more a "quality of life" per dollar.

Hackers also like living and working near other hackers in a hacker-supportive community.

Also, if you're a Berkeley or Stanford grad, you probably prefer living in an exciting city like San Francisco instead of staying in suburbia. And even if you personally don't, your friends will, which means SF is still the place to be.

That's a lot of it. But even if we'd wanted to stay, the real estate situation would have made it pretty hard.

And hackers move there for better hiring opportunities.

Quality of life has a lot more to do with it.

There are gigs on the Penninsula. Might as well be living in LA though. You drive to everything. Traffic is nuts. Biking puts your life and sanity at constant risk. Few areas have any charm to them, and none of those are remotely affordable. San Jose / Santa Clara proper are, apologies, pits.

San Francisco is walkable, has street life, functioning transit (well, for low values of "functioning"), is not strictly a tech ghetto in the way the Penninsula / South Bay are, and beats the heat in the summer (temps ~15-27C rather than 27 - 41C). You can walk to bars, clubs, museums, talks, art shows, or a gym after work, or reach it quickly on transit. When Muni breaks down, you can reasonably walk home.

Yes, housing cost per square foot is higher than elsewhere. That's what density means.

The SF hackers I know moved there for lifestyle and quality of life.

And there succinctly described lies the economics of agglomeration.