You're right, but given the prices in the SF market, there are only so many people able to buy a $1 million+ home. It wouldn't be hard to increase the supply to the point where prices start to decrease significantly, especially if you start to build a decent inventory of non-luxury units (not everyone needs or can afford a doorman).
It's not a binary proposition though. There's always an equilibrium, and it's difficult to determine how any given change might affect it.