Something like this would be a huge improvement and reduce housing costs.
https://www.strongtowns.org/journal/2018/6/6/toward-dynamic-...
https://en.m.wikipedia.org/wiki/Danchi
Housing didn’t become a depreciating asset there over night. It was the express result of the state intervening in the market.
https://www.pewresearch.org/politics/2022/09/19/modest-decli...
I don't know if this is correct since historically houses were built by a combination of smaller and larger developers who were unable to collude on production and pricing; there would be cycles of boom and bust where they would build a huge surplus of housing, the prices would crater, and a bunch of developers would go bankrupt.
At least, that's how it went in the '80s and '90s when I was homebuilding-industry-adjacent, maybe the whole thing is corporatized and financialized now to the point where there's basically a cartel that controls prices. If so, we should maybe investigate what incentives led to that.
Cities have been writing laws and zoning that prevent economies of scale from kicking in for decades. If they just stop doing that, we'll get more housing.
You're stating this like it's a fact, but you haven't explained why. In a free market, competition is on the basis of price and quality.
Imagine if you are currently owning and occupying a house and have a chance to pay your mortgage by building a rental property on the unoccupied half of your lot. A lot of people would be very happy to do so if it were legalized.
Edit: But you are totally right that socialized housing would be an excellent solution.
The solution is quality social housing, built by the state in large enough quantities to disrupt the market.