It's a circular problem too. People buy an expensive house somewhere and it becomes a substantial part of their net worth. Home values decreasing would impoverish them. Home values increasing would enrich them. Homeowners vote a lot more than renters, especially in local elections. So you quickly end up with local governments full of people (most of whom are also local homeowners) incentivized to keep property values high.

The problem must be taken out of the hands of local governments, but even at the national level, there's never going to be political will to slash home values.