They're a little off, but not much. The problem is that most people can't build a 5k sq ft place on a 7500 sq ft lot without going down as well as up. Basements in the Palo Alto flood zones are crazy expensive to build and permit so most don't do it, opting to stick to the sq ft requirements, which on a 7500 sq ft lot would be ... 3200?

5k would need a 10k lot in palo alto. A 10k lot in palo alto goes for 3m to 5m depending on neighborhood.

So , yes, it's nuts.

In my opinion, 3200 sq ft is more than plenty for a single family (2-4 people).

Land/lot cost: pretty dead on from my browsing of real estate in the Bay Area. I think the cost to build ($2M) is a little high — but I suppose the kind of person that drops $2M on the lot is "in for a pound" so to speak and will want the works when the house is constructed.

Presumably you mean they're to low? Don't forget that land and construction prices have continued to increase by a fair amount in the past two years, so expect to pay somewhere between 10% and 20% more, depending on the area. Also note that your local muni government may flat out refuse to let you build the house you want to build, depending on which city you're in and how big the house is you're trying to build.

Do does that mean housing prices are justified based on construction costs?

From what I know they seem in the ballpark to me. Los Altos especially is one of the more higher end, expensive areas in SV.

For the cost of construction or the land itself? The post is from November 2016, which could explain inaccuracies in the latter.