You can absolutely build a new hone. The conundrum is that the land value is so high that you have to build as big as possible with finishes to match the neighborhood, even if you don't need the square footage.
I'm waiting for my area to allow multifamily and or detached ADU before I build.
Cupertino is being sued for violating state law for not rezoning for housing. In fact, Cupertino spent funds allocated for affordable housing on lawyers to fight against affordable housing.
It sounds like you disagreed with the parent comment but then you demonstrated his point. You can build a new home, but the zoning code should have allowed you to build many homes instead of just one.
The party deciding how big to build probably isn't going to build to stay there (if so, they are just optimizing for the highest profit, not facing a conundrum).
I live in a place with no building codes (and barely any zoning regs) and raw plots i looked at asshole boomers encumbered their title with irrevocable CC&Rs preventing small starter homes before they croked. Most the properties I looked at were poisoned this way making it totally impossible for young starting families to stake down, it was quite infuriating.
You'd be surprised even in rural undeveloped areas how hard it can be to build, it's all gotten much worse in the past 50 years. In the city they damn you with onerous permit and utility connection requirements, in the country they slit the throat with ever more onerous septic and well environmental restrictions which of course were voted in by people who grandfathered their own property in.
300 sq ft of land and a used RV to park on it might be affordable. People might not like some the implications but it's probably cheaper and more sanitary than the alternative of those people in tents.
Counterintuitively, no. People by and large are buying a token for a build site. Look at any zoning area for SFH and a massive portion buy the least acreage they have to.
By creating far more tokens the price spirals down, even though utility rises. The utility of land actually has a pretty weak link to its price.
Take at the extreme of housing fitting into a pinpoint. No one even needs to buy your land even though it now has infinite housing utility -- even though essential it is abundant so it becomes cheap like water.
I'm waiting for my area to allow multifamily and or detached ADU before I build.