Check out this article from the Chronicle.
[T]here has been an increase in the number of Bay Area homes that fail to appraise for the purchase price, according to Ed Krafchow, president of Prudential Realty of California, Nevada and Texas. In such cases, a lender often walks away from the deal or asks the buyer to pony up more purchase money. "There's a lack of rationality in the market," Krafchow said. Such cases lead some pundits to conclude that unlike the more stable national housing market, the Bay Area real estate sector has become untethered from reality and vulnerable to a marked slump in the face of rising rates.