And when demand exceeds supply by enough, the prices go up until they reach a point where it becomes non-unprofitable and then people stop "refusing" to build m

And when demand exceeds supply by enough, the prices go up until they reach a point where it becomes non-unprofitable and then people stop "refusing" to build more housing. And who is refusing to build more housing? I will personally arrange for as much housing as you like in any neighborhood in any city in California. Oh, for the price that you desire? OK, nope, sorry doesn't work that way.