Looks like some air is being let out of the Bay Area's real estate market.

Following years of increasing employment and wealth driving up rent and property prices in San Francisco and surrounding cities, demand for luxury housing appears to be on the decline and housing and condo price appreciation have "basically plateaued," according to Paragon Real Estate Group.

"Slowing or plateauing appreciation does not imply a crash, and the cooling of a desperately overheated market to something closer to normal is not bad news," reads a report Paragon released Monday. The sentence was set in bold type.

"Indeed, an improvement in housing affordability (and supply) would be good news, both socially and economically. Likewise, a shift from irrational exuberance in the local economy to rational optimism would be a healthy change," according to Paragon.

Luxury home and condo sales were on the up and up from 2012 through 2015, but recent data indicates a possible decline this year. Paragon reports that in San Francisco there were three percent fewer sales of luxury houses, or those priced at $2.5 million or more, in the first five months of 2016 compared to the same period last year. Sales of co-ops, luxury condos and "Tenancy In Common" units (TIC) dropped 25 percent over the same time period.

There are some caveats to the data. Paragon notes, "We do not have access to up-to-date statistics on new-project, luxury condo sales activity, so do not know if that segment has also cooled or is simply cannibalizing the resale market illustrated above."

"Based on preliminary data, it appears that accepted-offer activity in May for luxury houses was very strong, possibly even exceeding levels of Spring 2015, suggesting that buyers took advantage of the greater selection of listings to jump in. If so, this will show up in the sales data for June," the report adds.

While the apparent shift does not necessarily indicate a crash in the housing market according to the report, Paragon did couch the numbers in the context of greater caution in the startup world. IPOs started to dry up in the middle of last year, notes Paragon; valuations of unicorn startups (valued at more than $1 billion) dropped, and employment declined.

Writes San Francisco Business Times' Mark Calvey in a post about the report, "By almost any measure, the Bay Area's roaring economy is cooling."

But cooling doesn't mean cooled. A years-long hiring binge in Silicon Valley has created a imbalance that could take just as long to rectify. According to the Wall Street Journal, the city of San Jose is currently opposing a development project in neighboring Santa Clara on the grounds that it would bring too many jobs to the region, worsening San Jose's homes shortage.