>And I question that only young people will want these units. I'm in my 50s and would love to have a tiny affordable place in the city, even if I only used it on weekends and airbnb'd it the rest of the time.

So you're effectively saying that these would become unlicensed hotels. That's not very attractive to local residents.

(I actually agree that small apartments would be attractive as pied-a-terres. But that's not really the sort of housing that city planners prioritize or should prioritize.)