It's a meme that just won't die even when we are currently seeing the major downsides of very high population densities. I moved from SF to a suburb in another state (with a balanced budget requirement) and have 3x the space for ⅓ the price. I am still closer in commute time to the major job centers than most of my SF coworkers were.
That sounds like an allusion to a Yogi Berraism, but I don't think it really is.
When I lived downtown within a 10 minute walk of work, it was pretty nice, but most of the space was not apartments; it was commercial. Offices, restaurants, etc. In fact, my apartment was a converted hotel - the sort of place I couldn't hope to afford in NYC or DC.
So, isn't it kind of normal for central urban areas to be too dense and high rent for (normal) people to live in?
Conversely, I'm living within city limits now, but practically it's indistinguishable from (and adjoining) "suburbs" so saying people need to live in this sort of place instead seems meaningless to me.
Unlike restaurants, which the original quote referred to, people sometimes live in places they don't like because of extenuating circumstances. Just because a whole bunch of people are living in densely-packed neighborhoods doesn't mean they all want to live in them.