"the more people working the more growth and innovation and the more opportunities and capacity for employment"
So if I'm understanding this causal relationship you're suggesting, the problem is too many people are rejecting employment, and if more people wanted to work there would be more jobs?
Housing has perverse economic incentives, mucking it up.
It is also, obviously, a limited resource that doesn't compound directly. Although its usefulness could compound in terms of density and vertical use increasing housing.
The problem that slows that:
In almost all areas, "property taxes" actually tax both the land (the exclusionary resource that should be taxed since its use reduces land available for others) and the property on it (a wealth tax).
The result of it being a combination tax, is that increasing the value of property on land increases its tax as well. So there is a strong disincentive undercurrent reducing investments in increasing housing on property. It isn't as profitable as it should be.
Even worse, land which is underused, is only taxed as land. Basically getting a tax break relative to the same land nearby which has been developed for maximum use. Meanwhile, the land value goes up parasitically, if while holding but not improving land, neighbors invest in their properties.
The result makes owning land a very good passive parasitical value-growing investment.
Which makes it useful for rich people to store vast sums of money in. Driving prices way above the market value that simple housing should have.
Until the tax issue is fixed, housing can't be fixed. Other changes may be needed to, but just that would make a big difference to everyone's incentives.
(It does happen - but rarely. In 2002, Altoona, Pennsylvania adopted a pure land-value tax, meaning they taxed only the value of the land, not the structures. By 2011, this system fully replaced their traditional property tax, renormalizing so the total tax remained stable. I.e. land was taxed more, improvements none. The effect: owners of productive, developed parcels (homes, businesses) paid less tax, while holders of undeveloped or underused land, such as mansions rarely visited with lots of open acreage, paid more—effectively removing the financial instrument advantage, and turning them into money pits. Land prices declined, development increased, and affordability improved for locals. -- Unfortunately, in 2016 the property tax was reinstated as before.)
"More people working" merely contributes to growth and innovation. You need other inputs as well. The number of people working may or may not be a bottleneck.
But once you do have growth and innovation going one way or another, then that leads to more jobs.
So if I'm understanding this causal relationship you're suggesting, the problem is too many people are rejecting employment, and if more people wanted to work there would be more jobs?