[refurb]

That was actually my point. The areas of SF that have gotten ridiculously expensive are areas where the housing is actually sub-standard to what you'd see in most of America.

The house that just sold for $2M wouldn't even be worth $200K in most US cities. The house is just beat up and old.

I could see paying $2M for a gorgeous house that is either new or recently upgraded. There are houses that are basically condemned going for >$1M!

[danans]

I think the mistake you're making is thinking that the value of houses in SF is dominated by the value of their structure. Rather, it's dominated by the value of the land they occupy. In the case of the $2M sub-standard SF house in a desirable area you mentioned, if it burned down to the ground, the land would still be worth well north of a million dollars.

Edit: wording