That was maybe true in the past, but todays exurban sheetrock palaces are impossible to be turned into low-income/entry-level housing. It starts with the zoning requirements - are you really going to divide a 2500 sqft McMansion into a duplex without an epic zoning fight? And then there's the transportation/parking issue.
The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed.
It is my understanding that builders are responding to the demand from home buyers, and people that can afford a (starter) home want 2000sf at minimum.
Also the costs of a house dont scale linearly[1]. A small home costs almost as much as a 2000sf home.
[1]https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
Even in cities with little zoning requirements (like Houston, and heck, even Tokyo), you still see McMansions being built rather than low income housing. Low income housing is still old housing from the 80s/70s, and the problem you are referring to (that housing built today is not very convertible) is one for a sadder future.
> The real problem is that 1200 sqft entry level housing like it was built in the decade after WW2 isn't made any longer but is urgently needed.
Having shopped for homes in the last few years, there were plenty of 1200 SQFT options in the places I looked at, they were just $700-$800k rather than $900k-$1.1m. Condos are the more realistic options in that case (I saw one I liked for $700k with a reasonable HOA, my wife wasn't having it, however). She preferred a 900 SQF SFH over that, for reasons I couldn't figure out. All were still considered luxury however since they were almost brand new.
Note that yes, I live in an expensive area, but usually when we talk about affordable housing, we are talking about places where people want to live (vs. say Detroit).
This is the highest in the world. [1, 2]
That's got nothing on San Mateo's $1264 average list price and $160-350 per square foot in construction costs. [2]
[1] https://cbreemail.com/rv/ff019c9050e5e959ddee96391147a04f828...
[2] https://www.statista.com/statistics/1234783/average-sales-pr...
Isn't much of the listing price related to land costs (and then of course profit)? To say that construction costs are only 50% of the sold to cost doesn't tell me much, how much did they pay for the land on a SQFT basis?
No it is not. Construction costs (material, labor) are sky high even if property costs are as well. Building high-end housing has always been more profitable than otherwise, low-end housing is simply high-end housing 20 or 30 years in the future.