If salaries don't need to reflect local cost of living, it seems that salaries will be subject to change. Fairly soon?
that's an excellent point!!
You're assuming that salaries are not also impacted by the immense amount of wealth being generated by the Silicon Valley economy, though. And you're also assuming that housing prices will radically change, which I don't think is guaranteed even in the medium-term.
That's not what this article and others are saying. That is, people are leaving and housing is falling. Also, much of the appeal comes from bars, restaurants, boutiques, and such. Those too are falling off the map.