If you want everyone to be able to afford a house with a yard within walking distance of downtown Palo Alto, there aren’t enough of them for everyone that wants to do that, and AI (and utopia) can’t change that. Proximity to others creates scarcity because of basic physical laws. This is why California is expensive.
This is something I always wondered about in Banks’ post-scarcity utopian Culture novels. How do they decide who gets to live next door to the coolest/best restaurant or bar or social gathering place? Does Hub (the AI that runs the habitat, and notionally is the city) simply decide and adjudicate like a dictator or king?