> If everyone demanded spacious detached housing that had approximately four times the number of bedrooms per person, then there would be similar problems.

Even if you built that housing, let's say you are in Houston or some texan city with lots of space, it would fill up. Your traffic problems would be even worse of course. Luckily, a lot of cities are hemmed in by water/mountains, so the only way to build is up, but if you do build up (like in HK, which is a good example of a city that is hemmed in by water and mountains), your city doesn't necessarily get cheaper, you just get more people.