Eliminating legislation which mandates minimum house sizes, minimum insurance coverage, etc, can also serve to make the cost of living cheaper. If houses smaller than 2000 ft^2 are illegal (which they are in many places), you are obligated to pay more for a house bigger than you need.
[1] E.g.: http://www.realtor.org/RMODaily.nsf/pages/News2007032701?Ope... or http://www.infoplease.com/askeds/us-home-size.html)
Also note that even as more homes were being built, the resources to build these homes were getting more expensive due to the price of lumber and copper getting bid up. So even if you can change the zoning laws to allow more building, the price still gets bid up to some extent from the price of the natural resources.
I agree of course that these laws enforcing minimum house sizes and minimum lot sizes should be repealed. I think there are all sorts of policy policies that should be enacted to lower the minimum cost of living while preserving quality of life for the things that really matter.
The causality might go the other way. When feminism became popular and women entered the workforce, it's not as if more homes got built, more oil was pumped from the ground, more land was discovered, more cars were manufactured, etc. Women did not enter construction and manufacturing trades in large numbers, and the production of homes and natural resources are bounded by natural conditions and regulations, not by labor. So when women enter the workforce wages are pushed down as they compete with men, the price of housing is bid up by two earner families, but production of housing does not go up accordingly. So prices rise and then all households need to have two earners to keep up. The modern economy is primarily not labor bound, it is natural resource and regulation bound, so more labor just results in an arms race where other people need to work harder to keep up. Legislation that mandates maximum work weeks, minimum vacation amounts, and mandatory retirement, might make a lot of sense to avoid the sort of work-hours-prisoners-dilemma we seem to be stuck in.