I realize that there is a step implied there.... when you earn more you have more to spend on housing hence the bidding wars. Also California weather wise has been a desirable location for a very long time hence the bidding wars. Housing prices in California are high for multiple reasons these are two of the biggest
It may be close to a chicken/egg scenario, but I believe companies pay the high(er) wages so their employees can afford to buy homes - which (IMHO) are high because of the rules, regs, etc.