I think your argument is based on a bunch of assumptions that I just don't buy right now. I just think that things will more likely cause more bad outcomes.
Homebuilders want more units. You have real estate developers that are building single family homes to rent. Yes, I think the Calida Group is one of them
You have other investors that have no interest in doing so. Pension funds, international investors, hedge funds. They just want to grab up the limited supply already there and coming online, then keep supply from increasing to much.
Plus again, the benefits of homeownership go away for a large chunk of the middle class.
I just don't think allowing more homes to fall into the hands of people saying they think building multifamily housing hurts their bottom line won't have any negative consequences