The answer is because it’s no longer cheap to build housing. Developers would loose money building small houses to be sold at market rate. Hence why everything

The answer is because it’s no longer cheap to build housing. Developers would loose money building small houses to be sold at market rate. Hence why everything is luxury - it’s those super-size-me margins only this time it’s not greed, it’s necessity. Materials are expensive, labor is expensive, standards for new buildings are high. The other reason is that during the baby boom we already built on much of the conveniently situated land (flat, close to existing areas and infrastructure, vacant or agricultural). Now we have to go and build out infrastructure, perform grading, tear down the previous building, clean up its toxic waste, etc. It all costs money. Much of Silicon Valley was built on orchards. Now we’re trying to build on superfund sites.