I think you have the right facts, wrong (or at least unsubstantiated) conclusion.

Much of California's problems lie in regulatory capture. Housing can't be built because homeowners have experienced great wealth gain and don't want it to be touched (at the detriment of livability for all generations after -- or folks attempting to climb to socioeconomic ladder).

Then you could make a similar argument for social spending on homelessness, which at least from the Bay Area seems wasteful in that it doesn't attack root problems (drug rehab and housing).