They're claiming we can see both, because the number of people sheltered per unit of land will have increased.

While I see this as plausible in some cases, I also think it's sweeping a big error constant into "housing affordability" if we're saying that the kind of housing "affordable" to one generation is of a different kind than was realistic for the preceding generation. If your parents could afford a single family home with a yard and you can afford an apartment in a building put up where someone's single family home used to be ... surely we can agree that actual housing affordability meaningfully decreased?

Lot A has 1 single family unit. Land: 300K. Building: 600K. Total per unit 900K

You subdivide and build another house on the lot with building value 300K. Total land value appreciates 50K.

Outcome

Unit 1 land 175 + building 600, total 775 (and the owner gets 175 for the land they subdivided and sold off , coming out ahead 50k in cash)

Unit 2 land 175 + building 300, total 475.

Average unit cost on the lot is now (775 and 475) = 625 (30% decrease)