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Why North America Can't Build Nice Apartments [Video, 12:09]
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While I think this is an issue, I think it's a minor one. If it was a big problem, we'd see a whole bunch of 2 storey apartments sprinkled amongst single family homes. But I've never seen one in all my time in Toronto. Because there's a whole ton of regulations that make it impossible by just plain making it illegal without jumping through a whole ton of other hoops that make it far too expensive.
I'm not saying fixing this won't help, but it's just one of dozens of issues, and a minor one compared to some of them.