It's a single family house. So you're paying for the land. The house will have to be redone. After evicting the tenants, that is.
It's pretty expensive to do a rebuild in SF. But if sells for $599k you'll have a sure bet they'll do a down to the bones remodel.
The “housing crash” standing before you ;)
The thing is, to even get back to prices we were complaining about a decade ago is a hell of a haircut for people. To get back to prices that are considered reasonable would be ruinous. We've really overcooked this whole real estate thing.