If areas are not zoned for more housing that requires approvals. Often times those approvals can have a negative impact on existing housing in various ways. Ways that may negatively impact valuations and this would be a change that buyers of the existing inventory were not informed of or expecting. That has to be considered even if there was a magic way to somehow say ‘this new zoning will result in a net better world in the end’
Infrastructure also needs to be considered. Increased population density may not have been accounted for in roads, sewers, etc. Often a fixable issue, with lots of time and money. Schools and other public services may need to be increased as well.
There are other things to, but I think you get the point.
Meanwhile, converting short term rentals back to standard housing IS something that can be done quickly and with very few approvals relatively speaking. Things were obviously already zoned for this and buyers would have been expecting this anyway.
Converting short terms rentals back is likely to cause some amount of property holds to dump (sell) these properties that were only bought to be Airbnbs, potentially lowering house prices, at least temporarily.
Ultimately this decision likely is one of the most efficient ways to begin to address the immediate problem in the fastest and most practical way.