It's functioning, but I wouldn't say it's functioning properly. Prices have had to rise much farther than they would in a less encumbered regulatory environment

It's functioning, but I wouldn't say it's functioning properly. Prices have had to rise much farther than they would in a less encumbered regulatory environment, and as a result, it's been very disruptive for a far larger number of people than it had to be. If there was less encumbrance, we would have seen a housing construction boom well before the prices got to the current, rather ridiculous levels. Compare the number of yearly housing starts and pricing in Seattle to see a more functional market, which happens to be absorbing a lot of SF's excess demand. If your bar for a properly functioning market is that prices rising have caused normalizing factors to kick in, then yes, of course that's the case, as always happens in markets that aren't completely messed up.