I think the gist of it is that real estate prices are driven by the average, while homelessness is driven by the median. In a static system where everyone's level of wealth is frozen, then increasing housing supply would trickle down as you suggest. In reality, average wealth is increasing as fast or faster than housing supply can be added. If new wealth were more or less evenly distributed, this wouldn't be a big problem ("a rising tide lifts all boats!"), because the median wealth would move roughly in step with the average. But it isn't. Over time, a steadily increasing fraction of new wealth is captured by people who are already wealthy, meaning that an increasing fraction of homes are owned by the wealthiest X% of the people, and an increasingly large proportion of the population must rent. And because, unlike most consumer goods, housing is not an option (ie, the market is inelastic), rental prices are constantly driven toward the limits of tolerance. So we see a greater and greater share of most peoples' income going toward housing, with the accompanying economic and social stress that creates, including homelessness.
