You are ignoring the high demand for used bikes. I imagine a lot of people buy cheap used bikes because they now that there is a high likelihood of their bike getting stolen. Ironically, this behavior fuels the demand for the very same bikes that are getting stolen.

"Reporting people who have abnormal numbers of bikes"

There are a few well none spots in the bay area where most stolen bikes end up. The problem is it's hard to prove that these are the guys that steal the bikes, and the police don't really care that much.