Its because people don't WANT to live there. When you are in more desireable areas, rents and home prices increase. You will pay more for a home in San Diego, than you will in Fargo North Dakota.
As for the rest of your post....I live in LA...and all of my neigbors speak English, although I wish there was more cultural diversity in my particular neighborhood....oh...and my commute to work is about 15-20 minutes.
The cost of different things varies on all the components within it - it can be complicated.
Base-costs - this is the minimum cost that is spent by a company to produce each product and deliver it for sale to a larger store.
A producer has to cover manufacturing costs - everything from the ingredients or elements of said product - to the cost of labor production, equipment, packaging - and shipment.
If you have an area that's harder to access - product base cost might be the same but shipping will be higher.
You also have business-profit margins. A business' usual bottom line is profit - maximizing profits is where many problems come from . .. it's a fine line.
On top of the base-cost is the cost for the store to obtain shelve, maintain, market. . . as well as the store's profit so they can cover their costs and all that.
Then there's tax - state, federal.
Lots of components - lots of different niches in a product's path to the shelf which hike the costs up. . . and everyone wants some sort of profit - everyone has to pay different taxes.
A house is no different than any other product - it's just stationary, subject to different taxes, and along with the product (house) you have to buy land and cover other things. . . there's more cost overall - labor is more, for example - a large team of people have to make a house - but only a few people in a factory make a watch. . . and so on.
Something being expensive isn't necessarily a sign that it's worth the money, either. We can look at name-brands and generics for example. A good one is Tylenol. For (me) a bottle of gel-caps (24) is $5.29. But I can save $2.00 by buying the same exact product sold under a different (generic) brand-name (Great Value or whatever). It's packaged the same (in a bottle - in the box) and it looks the same (gel-cap). With the same ingredients (Acetaminophine - 250 mg) . . . but it's sold by a different company with a different profit-line approach.
Yet - tylenol still outsells the identical generic.
If I were to find an identical house and plot of land in California (3.5 acres with a 3 bedroom/2 bathroom mid-sized house) how much would it cost me to purchase?
If it's the same exact product - but the difference is all the components in the cost chain (shipping, cost of labor, location, related taxes and fees - etc etc etc) - then what is the perk to spending four times as much in California?
Obviously they couldn't get away with exorbitant costs unless there was the natural draw of the area which attracted people and made people feel that "it was worth it"
And so it all comes down to personal opinion if someone's *choosing to move there* - "is it worth it to move there?" - some say yes, others say no.
But if you are born and raised there - many don't have a choice - they have to figure out how to be able to continue to stay there. . .many don't feel they have a choice.