Not that it necessarily invalidates your comparison, but the home pricing run-up has resulted in many people who wouldn't be able to afford a mortgage on their own home if they had to re-qualify and buy at market price.

Far from assuming this, that is the entire premise. Housing isn't that expensive in Detroit. It's expensive in San Jose. So more housing needs to be built in San Jose. This won't remove people from Detroit because the people have already left Detroit (and those cities are quite far apart). It might remove people from San Francisco, but that's a good thing too.