> best way to make large homes affordable is to allow the construction industry to build freely.
No. Not even close. Once developers get into this, they always seek to achieve the highest price as possible.
> Deregulation leads to low prices which leads to ample living space
This is only true when there is desirable livable space, affordable materials to build the housing, cheap labor, and honest people who are doing the construction.
Regulation front: I do agree that overly strict zoning causes a lot of issues. However, we have an aggressively (some call it exceptional individualism) caustic population of people.
Economics still will fly in the face of the author here: An increase in population and a push for a mass audience.. that's going to create a scaricity in places they want to live. That will increase the total overall cost (cost to government for services, infrastructure, infrastructure pressure [this is more of a case in road based transit], land space/value, etc)