The median price of a house in Los Angeles County is about $300,000. When a subsidized housing unit costs $600,000, the average person is implicitly paying a lucky family to live in a nicer than average house. This is of course inefficient--it also undermines the consensus necessary to make sure everyone is housed adequately.
We do indeed have a huge problem in Southern California--many families do not have sufficient income to afford a reasonable unit in a location close to a job. Building gold plated housing in Santa Monica does not help solve the problem.