There is indeed a shortage of new construction in affordable family housing. But higher end housing, which is far more profitable for developers, is still being built at a steady pace.
That's been a major snowballing problem where I live.
Single story, one family homes on good sized lots are the norm. Most built in the 50s-70s and most are about 1200-2200 ft^2 range, depending on what area of town.
Those are steadily being bought by developers who do one of three things-
1. Demolish and build a 3500+ ft^2 two story monstrosity that hugs the frontage requirement and runs lot line to lot line laterally. Back yard is filled in with large, free-standing garage and huge concrete pad between house and garage. Almost always, all mature trees on the property are cut down unless they're on the line in the back or very front. House bought at $250-300K...sometimes less...sold for $750K to $1 million depending on location.
2. Buy two adjacent homes and do the same as above but put in one really huge monstrosity that sells for $1.2+ million, usually with additional concrete pads to accommodate pool ect and much larger garage.
3. Buy three adjacent homes and infill with 2 monstrosities described in #1.
#1 is most common, so technically inventory doesn't change, but the pricing is insane. I toured several of them when we were buying in 2019 and it wasn't even worth it given the big box store materials (trim, doors, cabinets ect) and hasty construction. Two of them already had foundation repairs (fiberglass internal reinforcement) and they hadn't even had a single owner yet. At that time, they were pricing for $550-650K. Similar builds now are hitting the market at $750-850K.
But the effects of them are causing a snowballing of the problem since the developers have zero consideration for surrounding properties.
A relatively minor problem is that the smaller houses are usually set far back from the front property line. With the double story houses and garages going up closer to the back lot lines, houses that once received healthy amounts of sun are now shaded significant parts of the day. Whereas before the neighboring house was some distance away, you now look out your window and see a wall with an HVAC unit 6-10ft away. Probably a fence, too.
Bigger problem is the drainage. With a higher % of the lot covered by house and concrete, more runoff is occurring. Grading is usually done haphazardly so it's not running to the street, but to the neighbors. This has resulted in a lot of people developing flooding issues in their basements, leading to foundation issues they didn't previously have. Well, now their property value is dropping and they look to sell while they can.
And guess who's waiting in the wings to snap up the property at a discount price? The same developer who f*&^ed it up to begin with. Rinse and repeat.
It's gotten so bad that a historic park in town that's a lovely wooded valley with a creek running through it and a bunch of picnic sites and shaded lawns is being screwed up by it. Runoff increases have stressed the capacity of the creek and caused damage to areas of the park due to increased water flows during rainstorms. During heavier storms, the manhole covers have been pushed out of the storm drains because they exceed capacity.
But the city council is pro-development, led by our veneered toothed insurance salesman mayor. What was his brilliant fix for the affordable housing problem in the city? Give a national developer a waiver on zoning requirements to build a ridiculous apartment complex on the outskirts of the downtown area where the retail area meets residential neighborhoods. Some of the apartments will be single bedroom for $1000/month. But most will be multi-bedroom for up to $3000 a month. Which is a mortgage for a house in most of the city.