Can people wait multiple decades for this to sort out? People without housing they can afford need it immediately.

There are going to be losers in this. No avoiding it.

Indeed, that's my thesis, I appreciate you making it crystal clear. The pipeline has failed, and if there is a will to fix it, it will take time. Until it's sorted, year after year, there will be folks who go without affordable housing. There are, as you said, going to be losers from this policy failure.

How does supply/demand work itself out when an exogenous force is rapidly contracting the supply?

Humans take time to be produced.