The entire point of this post is that the only thing that can be built on an existing single-family plot is another single family home. So of course a torn down house will be replaced by a giant mansion, as that is that maximizes the profit.

If zoning was changed, and multi-family housing was allowed on that lot, then an apartment building would be more profitable than a mansion, and an apartment building with cheaper apartments would be built.

Mansion are being built because the that’s all the city council allows.