In an existing city, the cost to purchase land and buildings that would need to demolished, rezoned, and rebuilt as a higher density area with accompanying infrastructure is astronomical and wouldn’t be possibly by anyone other than the federal government only because they can print money. And politically, that effort would be dead on arrival.
The biggest issue with residental construction today is approval process and the amount of land that can be utilized.
An unreliable approval process means increased investment risk which keeps away investors.
Setbacks and parking space requirements significantly impact the amount of usable living space per acre of land.
Both of the above can be addressed by local municipalities. High density dwellings are going up all around in the rest of the US.
Granted, ADA and other upgrades in quality of life are nowhere near the big problem of the cost of reducing lot and block sizes retroactively. The design for cities made for cars and for pedestrians are fundamentally opposed, and cannot coexist.
If I got rid of my oversized two-car garage, I could recover maybe 400 square feet. Without a driveway, another house of the same exact size could be placed on the same lot.
Cars are antithetical to density. Discouraging their use will greatly improve city density, while also having environmental benefits.
This happens all the time in NYC, though. Anywhere from a several-story small/medium apartment building to a large skyscraper.
I think the limiting factor is much more likely to be air rights and zoning than safety standards.