They’re forcing me not to drive a Lamborghini

As you point out clearly, people who complain about water for housing don't care about water, they are just going to switch arguments without acknowledging that they were wrong. This is a very dishonest way to discuss anything, because their true motivations are not what they lead with. The true motivation is that this person thinks more housing will make the place "a dump".

In reality, water usage goes down as we build more housing, because people don't take much water at all. Landscapes take tons of water. Old appliances take tons of water. Take a house built in the 70s and replace it with 8 modern homes, and total water usage probably stays the same.

It’s about status and not being associated or bothered by commoners. Anything less is a ‘dump’.

There are also valid, less severe downsides to multi-family; including blocked views, traffic, increased school pressures, lower average taxes, etc.