Changing the zoning is a good first step, but not the only (or even the most significant) obstacle.
Between California and Bay Area regulations it is very challenging to turn a profit on demolitions except at the highest echelons of the housing market.
We need Land Value Taxes.
Dodd Frank made speculative financing so difficult, that the industry either scaled up, as was mentioned in the article, to make it worth the trouble of pacifying HUD, or scaled down and run a business that essentially relies on clients to finance the projects. Most builders (and others in the industry) were forced to scale down.
These were the builders that might have considered 4-plex or other small multifamily projects, but they've essentially been barred from the market.
They should have pulled their heads out of their butts and respected people's property rights 20, 30yr ago when the problems were becoming obvious. But they didn't so they're gonna have to pay up.
Repealing some zoning is a small step in the right direction but they're gonna continue hemorrhaging money until they start tackling the other ideologically driven inefficiency (of which the person you are replying to has named a few types) before they really start seeing improvement.
An opposite example might be, in the East Bay hills, on a steep area of dense old vegetation, a developer wants to bulldoze the entire thing, add heavy landscaping and drainage, and built four dozen "premium" homes. If the city council member is looking at the hundreds of millions of dollars that will change hands, over an are that is literally no dollars now, then the plan gets approved. You might guess, this is a true example and a developer from Hong Kong put their name on the project and it was built.
The case of a beach is also not-obvious, as it is world-scale irreplaceable.
I'm not sure if you are referring to the big tacky mansions on Highland Terrace in Fremont, but if you are those are now the most heavily-assessed properties in Alameda County.