This is true in many areas (California), but not in others. There are ghost residential areas in many countries. In 2004 in Spain 675.000 house starts - more than UK, Germany and France combined (45 millions citizens in Spain vs 80+65+65).

There were not unsurmountable government restrictions (obviously). There was no real demand for it. The housing demand was largely speculative, people investing in houses because "prices never go down". Often, they didn't even get rented - why bother, if the valuation of your "investment" grows faster than what you can get from rent?

In markets like these, huge increases in supply don't drive the prices down. Hoarding, speculation and housing flipping absorb everything that gets built. We still have insanely high housing prices today.

>The crash will come once average suburbanites stop protesting everything denser than a half-acre single-family home and city councils realize that mixed-zoning is far more sustainable.

So conversely, the crash will never come as long as average suburbanites continue to protest everything denser than a half-acre single-family home? Because I wouldn't bet on human nature changing any time soon.

I think geography also restricts the supply of developable land. Real estate is a finite commodity, while the human population doubles every 33 years. Even if you build up and with a higher density, there is a fixed limit to habitable space on earth. With a fixed supply and increasing demand, you will see increasing prices over time.