That's a great way to think about it! If we're spending $X on Y-thing, what other things could we have instead for the same $X?

That said, I'm guessing the reason is that there is not enough land, close enough to the University, on which the City of Santa Barbara will allow them to build.

Also, including the assumed cost of the land, you may not be able to build 1000 of them.

Also, also, the university may have authority to build on-campus 'dorms' but not 'houses.'