In these "rest of the country" places, you can't have a meaningful conversation about housing problems, because the residents will point to the suburbs/exurbs and say "those are still affordable -- that's where the middle class should go". Which is a better situation than say San Francisco, but it's still bad -- it's generating even more sprawl and further kills public transit (as this article highlights).
New dense urban construction in small Midwest cities is close-to-identical (within 10-15%) to top ten market pricing, even though wages are still 20-40% lower on average, and construction costs + land costs are lower. Small and medium sized Midwest cities cut themselves off at their own feet, building lots of "urban" housing that's priced identically to places like Seattle / Portland / Denver. They then act really surprised/frustrated when working class people complain about housing costs and gentrification in their "low cost of living" cities.
A $300k housing unit in "the rest of the country" is often just as unaffordable as say, a $600k housing unit in Seattle, if you measure that cost in terms of percent of paycheck -- which is what working class people rent/purchase housing with.
It's simple math. If the cost of building the development + required infrastructure is less than the price can sell it for then things will get built. It's the responsibility of the city to bundle the infrastructure requirements onto the building permit.
This is specifically the opposite of the case. Developers would happily build New York and San Francisco up into the stratosphere if it were legal. It's not, so they have to build out instead. This is 100% determined by the regulatory structure that legalizes sprawl and prohibits densification.