Real estate looks a lot like the stock market anymore. People value companies on metrics beyond simple revenue, profits, and dividends. With RE, investors understand that wage growth in a region flows into housing at a compounding rate due to leverage and are capitalizing on it.

So long as Seattle or LA have companies that pay above average wages to enough employees, housing prices in those regions should continue to grow at a a rate somewhat relative to differences in wages. What constitutes "enough employees" seems to be relative to how constrained housing growth is. In LA, housing prices are driven by probably the top 20-30% of earners.