Earlier quoted context omitted.
Luxury has some scientific definitions. Top of the list is size for a single-family dwelling. My city has liberalized zoning for size, but kept limits on number of occupants and such for fear of impacting infrastructure. The result is ever-larger units. New houses seem less like houses and more like diagrams of local building codes. Property line minus ten feet, there's your wall. Luxury apartments can also be define…
If the problem is that overseas investors are buying the houses, sure, that's a problem that decreases the amount of living space. But how would restrictive zoning fix that problem? And I still don't think the flipping is relevant in the long run. It's pent-up demand sorting itself out. They can't keep flipping forever.
Not only does restrictive zoning not fix the problem, it only makes it worse. Part of why you have investors buying properties in places like SF is that housing is such a hot commodity due to the restricted supply. If it was easy to make lots more apartments and condos there, it would be less attractive as an investment, which would mean less speculation.