Residential zoning laws in most California cities (and frankly, across the country) do no favors either. They're tuned tightly to encourage home values to go up not to stabilize the cost of housing and maximize housing accessibility.
This strictness is the backbone of what allows everything else to happen. There's no market dynamic - because cities (or more specifically, city residents) don't seemingly actually want a functional real estate market for a variety of reasons - therefore there is no way for enterprising developer to come in and build and sell at a price target they look to set.
Instead, it all has to go through this machinery as you describe. It has always been ripe for exploitation as a result.
Laws of geometry have nothing to do with it when zoning laws and other regulatory hurdles are the real barriers. Real estate is an in incredibly artificial market. It has none of the characteristics of a regular marketplace
This strictness is the backbone of what allows everything else to happen. There's no market dynamic - because cities (or more specifically, city residents) don't seemingly actually want a functional real estate market for a variety of reasons - therefore there is no way for enterprising developer to come in and build and sell at a price target they look to set.
Instead, it all has to go through this machinery as you describe. It has always been ripe for exploitation as a result.