But at the end of the day there are simple dynamics you can't get away from.
However, they also want the amenities that are only available in mid sized cities. The ability to have a single family home a 20 minute drive from downtown with a yard with available parking, undeveloped nature and farm land that isn't over an hour away, parks that aren't always packed, and many other things that are incredibly hard to add back into the city once it starts to be developed in any serious way.
The YIMBY solution is to let the market decide, which will always demand increased transformation of cities with good economies, when we'd build a better world for everyone should we put in more effort to transform smaller cities into the places with jobs, good wages, with high quality institutions and amenities. Tons of tech workers move to the west coast not because they've always wanted to, but because they know that they're restricting their career opportunities should they not move.
The thing with induced demand is, everyone admits that it's possible to out build induced demand - it's just impractical to do so, so it rarely happens. The housing equivalent of induced demand (people who live in suburbs moving to the city) is a very real phenomenon, but it's inherently self-regulating. If people avoid living in the city because of cost, they'll stop moving in when the price stops coming down.
Luckily for housing, while the main reason we don't have infinite transportation infrastructure is cost, the main reason we don't have infinite housing is regulation which is inexpensive (in theory) to remove.
More housing may not result in an equivalent drop in price. But it will increase the number of people with access to economic opportunity.
Suffice to say I’m in favor of increasing throughout. For both transportation and housing.
It applies to everything, from housing to hamburgers.
I have a hamburger restaurant where I sell hamburgers for $5. Some people buy hamburgers, and some people will not buy hamburgers. Some of the people who will not buy hamburgers would buy a hamburger if the price was lower. If I drop the price, I will induce demand.
Induced demand in the context of market-rate housing is highly speculative and if it exists at all likely to be very limited. It's sort of non-sensical, like saying that demand for the original iPhone (or any new product) is "induced demand", either because it was new or because people wanted to be like other people. That's not the kind of phenomenon the concept of induced demand is trying to describe.
Likewise for housing, induced demand isn't that bad. Most people will only ever have one house. In the case of a highway expansion, people can easily take multiple auto trips that they'd otherwise avoid given congestion. Unless the price of housing craters, I doubt most people will start consuming multiple homes.
Like yeah, maybe. But if a place is so awesome, then shouldn't we try to let more people live there? Shouldn't we trying to continue to do things that make this city awesome?
It's like saying, "I'm going to lose weight, by eating only pizza 24/7". Sure, you technically could do it from a calories in/calories out perspective, but it's going to do a hell of a lot of damage to your body along the way.
It might be less damaging to your body to lose weight by eating healthy first (building affordable housing, building public housing). But the urbanists are generally against this, they want to only eat pizza (only build high-end / 'market rate') while pretending that counts as an effective weight loss program, because "weight lost is exclusively just calories in vs calories out" -- "housing is exclusively just supply vs demand".
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Does their approach work? Technically, if you build a metric-insane amount of high end housing, you eventually slightly decrease a tiny percent off the yearly rental growth at the highest-end of the market (Seattle is the textbook example of this).
Is this a healthy approach for the city at large? I'd argue no -- it does massive damage to the poor/middle-class, and to the climate in general, all of which is all completely ignored while Urbanists focus exclusively on bringing luxury housing down tiny percentages for a tiny few people who qualify for them.
If you "migrate" the people with poor-to-middle-class incomes, your city becomes an empty husk. What is even the point of cities, if we assume most people could never "compete" well enough to live there?