I'm not sure about that. I think it's more that people tend to derive pleasure from one or two "must haves" about the place they live, but don't care much about the rest. If those "must haves" don't align with what
you value, it looks irrational, but it's perfectly rational to
them.
Personally, I can't stand living in a place that doesn't look out over greenery. I find I'm so much calmer and get more done when I can come home to a place with grass and trees and bushes, so I'm willing to pay a few hundred dollars a month extra for that.
I find it similarly irrational to think of all the people that can't live anywhere but the city. I mean, they pay more than I do, and they have to live with roommates, and their places are usually smaller, and they have to specifically go somewhere else for greenery, and they're looking at an hour commute. (I'm particularly perplexed by people who spend $5k/month to live in Manhattan, which is like SF * 10 in terms of all that overstimulation and has less charm to boot.) But over time, I've realized that these people aren't stupid, they just have different priorities from me. Some absolutely love having lots of small ethnic restaurants on their block. Some enjoy having most of their friends within walking distance (which admittedly would be pretty nice). Some like to go out clubbing every night, and there're lots more opportunities for that in the city. They aren't opportunities that particularly matter to me, which is why I wouldn't make those trade-offs. But they matter to the people in question.