Market forces are in play but when you have regulation just for regulation sake you get higher construction costs...get in a plane and fly over the San Francisco and Sacramento area...you will see more empty land then you would believe...just sitting there waiting for a brush fire....restrictions on development in California are punitive.....its a one party state...the dems run everything...poorlyNo, the market has dictated home prices.
San Francisco occupies a small physical area, and therefore has a limited amount of real estate - period. If enough people want to occupy that limited amount of real estate, the prices go up.
In San Francisco, enough people want to live there that the average home price is above $1 million dollars - and those houses are still selling.
First of all - Sacramento and San Francisco are a hundred miles apart - they're not the same "area".
San Francisco is a peninsula, surrounded on 3 sides by water, and on the other side by another city (Daly City). There's no "empty land" there.