People in SF simply aren’t willing to pay that much for the shoe box condos/apartments necessary to reach manhattan density. That’s what the market is signalling. Because of course even the most die hard nimby would likely take a 8 figure buyout offer for their 7 figure home. If the developer could afford that and still profit, i.e. if they could then sell the units at thousands of dollars per square foot.

If demand ever reaches that high then the market will move to a new equilibrium.