Earlier quoted context omitted.
By the free market alone, letting everyone get a home sounds like a terrible decision. There's a finite number of people that need a home and by the point everyone gets their own home, your business is doomed. On the other side, letting housing to be crazy expensive, with few people capable of getting a new house, will always be profitable.
If the free market were one entity that could coordinate and say "nobody build more housing, let's squeeze as much money from what we have already", sure, that would be pretty profitable. But if there are enough participants in the marketplace (which depends on the barriers to entry to homebuilding, like regulatory capture, knowledge, capital, and permits) one will want to undercut the others and build houses margina…
Yeah, and you probably also learned a laundry list of caveats which lead to the principle you're describing being non-applicable. Real estate is not a fully commodifiable good because it is non-fungible. A house in the middle of a city is not the same thing as a house 2 hours out of the city core. There is a limited amount of under-developed land to repurpose, and a limited amount of construction crews and machinery available at any given time to perform the work in question, so building production does not scale linearly with capital investment.
Construction has ALWAYS prioritized high-margin upscale dense construction where possible - if you own a block of rundown downtown shacks, you put a tower on it the moment you can. This isn't the issue - no one's complaining about Canadian Real Estate's ability to build a Class 1 commercial building or a high-end condominium complex. Toronto has been literally the number one city by crane count by a MASSIVE margin for years. The issue is how we can get widespread construction of low margin projects, Low-rise residential complexes, affordable housing, etc.