I would point the finger at NIMBYism and the fact that new developments in places like San Francisco, London, and New York have to hop through many many hoops to get built (and pass muster with a surprising number of "stakeholders").

Here is just one example...

http://www.bizjournals.com/sanfrancisco/blog/real-estate/201...

The TL;DR of this article is that a large new apartment block in SF is being held up by a construction union because the developer is refusing to hire union labor for every contractor role in the project.

Maybe we should reduce the red tape around building new structures and see how far that gets us before plowing more money into public housing and other government interventions.

Or maybe the developer could just hire union labor to build the apartment block.

Nah, that's what I'm talking about. Makes things too complicated and expensive. How about this...

If you have the capital, you can build whatever you want as long as you don't physically endanger other people (building meets earthquake and fire codes, etc.)

Why is it "too complicated" to hire union labor? That seems like an easy thing to do, especially since the developer would have ready access to a large labor pool, of which union labor would be one component.

There is an incentive to restrict housing due to pre-existing owners not wanting their investments in properties to plummet in value.