While this may be true, I'd like to see some unrented apartments in major cities that can't be filled before we decry this solution. Rents have been skyrocketing - so it appears there's a lot of people who WOULD like this trade, but can't do it.

The opposite is true. If people wanted these homes on large lots isolated from neighbors, you wouldn’t have to make it illegal to build other kinds of homes.

In my area, the government will use its monopoly on violence to keep you from building in a lot smaller than one third of an acre. Yet, in my pre-code subdivision (exempt from the minimum), houses are being built on 1/12 acre lots and selling just fine. In the rest of the county, the low density you see doesn’t reflect what people want. It reflects what a minority of people who control the local government have imposed on everyone else.

Right now there's very little around the US that's in the middle. On the one hand there's urban areas with no parking-minimums, mixed-use zoning, and cramped development. On the other is suburban and rural areas where there are strict parking minimums and single-family homes everywhere.

A more reasonable way to develop a city would be to have a cramped, urban core where everything is well connected, has low parking minimums, and minimal zoning restrictions, surrounded by areas of gradually decreasing density, and holding parking in "rings" around these areas. In my mind, I'd like to organize the city in these rings: walkable, bikable, short-drive/suburban, long-drive/rural.

The big issue is the US has made up-zoning impossible. There are no mandatory zoning changes as people move to an area, or anything of that nature. Add to this that many American homeowners derive a significant portion of their equity from their house value and you have a situation where it is very difficult for any area of the US to expand to accommodate to an influx of population.