I'm as pro capitalism as it comes but private equity should not be allowed to operate in the consumer housing market. They can develop and sell houses but cannot hold is my point of view.
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Notwithstanding that, the populist fantasy is that developers won't build more "because they are greedy", as though that math works out. If developers don't leave money on the table, then they'd want to build where the demand exists and it does. They face a number of constraints and bottlenecks, not just for materials/labor, but managing risk. Risk makes loans expensive, everything is built on credit. Some of that risk is compounded by the threat of litigation by NIMBYs, or regulatory requirements, or environmental review, etc.