Government intervention helped create the problem. In California, there is a protectionist tax policy that helps keep houses bought long ago affordable to stay in. If this didn't exist, a lot of old people would sell their houses because they couldn't afford the taxes on the current assessed value. They would take their winnings from the California real estate lottery and move someplace cheaper, freeing up supply.

The insane house prices kind of only apply to newcomers on the scene and the system is rigged. It is inherently unfair and also undermines a functioning economy.