As a fun exercise, try to get a house built in any metro area with a pop > 750k and see what you have to go through and how expensive and time consuming it is to jump through all of the hoops. You will find the answer to your question.

In most cities and towns across the US, you have to retain half the state bar association simply to get the permits to do the environmental and traffic pattern studies that must be submitted to the approval council before you can get permission to build.

> Housing is needed - more houses are built. Not sure why that can't be the case.

You arrive in a room with no inspectors. To the North is, "Of course we'd still have inspectors." To the East is, "Privatize all the inspectors." To the West is, "Let's build a disruptive app to facilitate illegal barn raising."

To the South is, "Let me revise my initial statement..."

>>Housing is needed - more houses are built. Not sure why that can't be the case.

Because every unit increase in a circle's radius r, causes the area to go up by r*r. These ever increasing concentric circles, cause infrastructure demands and spending to keep going up by factors of square.

Every unit increase in a Pizza's radius demands more and more cheese. To a point you will realize you get more Pizza when you order a very large Pizza than ordering 2 small Pizza's.

At some point you get two cities for Cheap than expanding an existing one.

You just can't keep building additional housing this way. In Bay Area where people stay as far as San Ramon and travel to work, you realise the taxes are just crazy high.

because god forbid the average person lives in a 1200sq ft home.