The point is that it's not a shortage of land. It's not that California as a whole isn't big enough to accommodate it's population. It's that specific desirable places to live are getting more expensive. You concede that this is true when you narrow your statement with "in the California coastal cities."

The problem is that people want to live in the desirable costal cities. The only way that's going to happen is if the city gets more dense. Cities that allow for easy construction are better able to convert low density housing in desirable areas to high density housing to accommodate the growing demand.