Price is too high, but you are in San Fran which has some insane pricing, and the bike is in great condition and a small hard to find size. Like you, I do not see high end bikes in this size, its really about how bad you want one. Compared to my area, San Fran prices are usually about double.
Its all about what the bike is worth to you, rather than the market, and your budget.
Your other choice is hunt for a better frame, and build a bike of your choosing. That one takes a patience, time, tools, work area, and quite a bit of luck in this size.
One centimeter is a little over 1/4 of an inch, so we are not talking anything significant size wise . Historically, many bike manufacturers sizing jumped in two inch increments (5 centimeters).
While I think you can do better, it probably will not be local (in that size). I pick up every 18 inch and 19 inch road bike I can get my hands on, as they sell themselves. When I find one that size, it is usually lower to mid level. I have not found a high end bike yet in that size. Wanting an Italian bike makes the search very harder.