Ultimately, local regulation of land use is a pretty classical Prisoner’s Dilemma; by all local communities optimizing for their own blinded utility, they’re creating a net worse situation for everyone involved, including themselves. It’s really the textbook example of a case where a higher authority like a state government needs to come in and force everyone to actually collaborate.

If every community increases housing supply by a little bit, the effect on the local “character” is nearly unnoticeable but the housing market stays healthy. If they all refuse, the market melts down and we get the mess we have now (and parents have the comical audacity to then complain about how their kids can’t afford to live in the same area).