Students are not turning away because the UC system is so affordable, and certainly so when compared to Michigan. UG tuition is around $14K/yr vs $16-20 at Michigan for in-state students. Applications should increase because the HS population in CA is still increasing, and OOS and international students like UCLA and Cal. I agree with you on housing though, the UC system needs to build a lot more dorms especially around the high cost UC campuses. Unfortunately CA is very expensive around the major cities.
I’m not sure that I trust the CA figures, they have a history of being skewed by political considerations. Unfettered illegal immigration could change those numbers rapidly.