Homeless people, moms and dads driving 2 hour commutes, people who would benefit from a more tolerant climate unable to live there, people unable to take good jobs... the human cost of people's NIMBYism is real, and it is staggering.
The environmental cost is pretty big too: https://www.redfin.com/blog/why-dense-housing-is-green/
1) (short term) Make remote work much widely accepted, especially for software roles.
2) (long term) Build offices/centers (e.g.) jobs outside of Bay Area and CA. This is much more scalable and beneficial for the country than having one or two super concentrated centers. Why not have 20?
Teachers, nurses, janitors, waiters and so on can't work remotely.
Splitting things up that naturally group together likely has some costs. VC's might not want to invest in a startup in, say, Tulsa, OK. I've read that some are changing their minds, and it'll happen some, but clusters do happen for a reason, and fighting that may create some problems.