The reason California cant build enough houses is because there are large areas where only expensive single family homes for the wealthy can be built.Econ 101, rise in demand = rise in supply, or a rise in prices. A rise in pice should cause a rise in supply alone. California has for some reason made it too difficult to build enough house to meet the demand. That's not a fault of capitalism, that's a failure of state and local government.
You can trace the why to capitalism.
When capitalism becomes so unchecked that it literally starts dictating how the government moves, that's when its officially a problem.