It's a limited area of desirable land zoned for housing. You could build all the tiny homes in the world in bum frick nowhere, but the unhoused would rather be homeless in a big city for various reasons. I probably would too.
This is another reframing of the problem. What makes the area desirable is previous investment society has made there, to the benefit of some and the exclusion of others; the scarcity is created by political choices, not intrinsic.