alt Hacker NewsSure, but if zoning etc didn't prevent you from doing that, the price of the land would just be far higher.
High enough again to make it hardly profitable (if you're lucky) to do what you're allowed to do on that land.
There are entire businesses that just buy lots, change their zoning, then sell them. It's all priced in.
You are confusing marginal price (or profit-equalization) theory with numerical limits on the level of housing unit production.
If people were allowed to build as they wished, they'd build a lot of housing, much of the housing crisis would subside and then the profitability of building house would equalize with the profitability of other uses. But stable point would give a lot more people housing.
It's like... Taxation or similar things can reduce X use of resource Y. Remove taxation and eventually X use isn't any more profitable than other uses but a tautology of markets/economics, not an argument the taxation isn't limit the production involved in X use.