Currently every area of a city is "zoned" for what is allowed to get built there. "Single family home" (SFH) zoning is the most common, and the strictest: it requires every building to be a house meant for one family. No multi-family housing (even duplexes) and no commercial use (even neighborhood stores or home businesses).
This NYTimes articles discusses some of the issues and how Minneapolis is changing its policies. This should be done everywhere:
A middle ground I really like are these mixed residential suburbs I'm seeing more in Ontario. On one street you'll find 3 car garage houses all the way down to 6-unit townhouses. All circling the same park with an apartment building on the far corner.
