This is an excellent point, and is the Primary reason why we have this housing crisis.

Things like zoning and regulation can theoretically be fixed, if voters wisen up. But the longer this goes on, the more middle class residents will leave the bay area for good. Once the entire middle class is gone, we'll have no hope of ever building cost effective housing (other than automation) because there won't be anymore cost effective labor left to build it with. We're already seeing pretty large inflation on a local level for services: like eating out and plumbing, etc.