Remove set backs, get rid of minimum yard requirements, loosen height restrictions.
The rest of the world has houses right next to each other, as do America's most prosperous cities.
Manhattan, the dense parts of SF, Boston, Chicago, etc.
The regulations about minimum grass and 4 foot of set back and no more than 1 or 2 stories, have nothing to do with fire regs and everything to do with long disproven ideas about suburban design that hark back to 1950s ideals.
Visit a modern dense city, Tokyo and London don't have massive fire outbreaks (sprinklers and modern fire codes still work even at density), but they do have an insane about of economic activity in the dense neighborhoods.
Want to solve the housing crisis and get people off the streets? Dump 50% more houses on to the market, heck have cities subsidize their construction if need be, and watch housing prices plummet. Watch mass transit become the life blood of a city, and watch entire new types of jobs become available. (People in NYC may be annoyed at bike messengers, but it is a job created by density!)
Sure, factories with toxic waste in residential neighborhoods are a great idea!
> Sure houses will be up next to each other
And we learned nothing from the massive urban fires othe 17th, 18th, and 19th centuries apparently.
All these onerous regulations you whinge about exist because thousands of people DIED from the conditions they outlaw.