>> It's not like suburbia is going to line up in droves to have their house converted into a duplex.
That's just not true! People would do that in the neighborhood I live in now in Los Angeles if they could because it would allow you to make the same piece of real estate about 1.5x times as valuable.
More interestingly, in Piedmont California where I grew up, there is a lot of controversy about this. That's an area that is very desirable -- great schools, pretty, close to San Francisco -- but also really expensive. Because its been a nice area for a long time many houses are on huge lots or even have servant's houses (!) that can be built up into a pretty nice house. Of course a lot of the neighborhood hates the idea of converting a single family lot into two homes even under these posh circumstances. But the economic incentives are powerful. I see it happening on my parent very fancy street.
PS: One of the things that really bugs me (in my neighborhood and where I grew up) is when home owners argue about preserving the local character. I grew up in city where my mom and grandmother grew up. The house I grew up in was an adjacent piece of land that once had a single house. Now the neighbors would freak out if you took these large plots of land and built two houses on them or god forbid a duplex. But the truth is they haven't lived their that long and if they did they would know that the neighborhood has always been changing. I wish they could make peace with that.