Usually a root-cause analysis asks for five why's so your analysis seems a bit short.

One should ask why it is that housing / land is more profitable than those investments in which banks and private equity previously invested. And then when you follow that line of reasoning (too much capital and credit -- thanks quantitative easing! -- poor performance on bonds due to low interest rates and restrictions on the quality of investment vehicles) and you'll see that the root cause is probably more financial rather than _just_ too little housing.

Debts need to be cleared, losses need to be accepted, and leverage unwound. Building more housing just gives banks and private equity more stuff to buy.