In Arizona, anything goes, they build shit literally anywhere, its flat (for the most part in Phoenix at least) and land is almost literally endless. Property is dirt cheap, houses are too and they have a huge overabundance of houses, I would say probably at least 1/5 of houses in the metro area there are currently unoccupied.

Areas that are desirable and have geographical characteristics that make usable land scarcer (which includes being near a body of water as that limits the land in one direction) are probably always going to have the characteristics of what you describe, IMO. One thing it does lead to is more valuing of older buildings, etc as these areas don't have the "tear it down and build something new" mentality of a place like Arizona.

You're right, a greater quantity of housing benefits renters, though low income people entering the community might not. Its sort of complex there, which is why the aren't effective opposition.