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Would you rather live in a big city or a small town?
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Subsidies. Both in form of roads and home ownership incentives being focused on single family homes. The fact that renting is the primary way to live in the city seems detrimental to it being cost effective too.
I find your point about renting compelling, is there anything that could be done to improve the situation?
Housing cooperatives seem good. There have been some successful uses of community land trusts to keep prices in check too.
Better laws surrounding collective loans feels necessary for medium density too high density housing to be bought up by groups tenets. This just an issue at large for community and worker owned coops in my experience. There are some creative crowd funding type bonds out there but its not very responsive and better suited for long term plannings then seizing on need or opportunity.
Lastly there are tenet unions to at least mitigate the rise of rent and unmet obligations by land lords.