You do realize one can live an hour drive from Palo Alto and have a place than the 25% of the price in Palo Also? And the commute time is much shorter than from France. It is just that people want to be close as possible to work.
Hollister to Atherton is 68 miles. To get to Atherton by 8am tomorrow, Google says he should leave at 5:50am: https://goo.gl/maps/bfSBp4vFtJQ2
If cheaper housing could be built on the peninsula--where there happens to be lots of low-density housing and open space!--he could live closer to work and the 101 and the 280 would have one less vehicle twice a day. But for reasons we all know, this will not happen.
PS: The structured wiring guys on this project are driving in from Tracy in the Central Valley and staying at a hotel on the mid-peninsula. That commute is even worse than Hollister. Google estimates it at 2hrs 40min one-way (!) for an 8am arrival time tomorrow.
That's changing. Prices in EPA are now >50% of equivalent housing in PA, and rising rapidly through the same processes that have given us $1.7 million starter homes elsewhere in the Bay Area.
There's really nowhere within an hour of PA that has home prices even 50% of PA, much less 25%. Three hours, maybe.
I've lived in a home similar to http://www.zillow.com/homes/34404-Torrey-Pine-Ln,-Union-City...
It might be the right personal choice for some people, but public policy should not be designed so long commutes are the norm.