The lesser the regulatory burden, the more organic development you'd see, including a much larger proportion of smaller projects and smaller buildings. Large steel or steel + concrete structures are grossly inefficient in terms of construction costs per square footage, except where property values are incredibly high. (Wherever you see such structures in areas without extremely expensive property prices, you can be sure there are other factors at play--regulation, government funding, etc.) That's why 5-over-1 (wood framing over concrete) is so common where possible. Some people might complain that many 5-over-1 buildings have too large of a footprint, but that's also largely due to the same regulatory economics.
Anyhow, if communities simply made a laundry list of things they don't want--e.g. no more than 4 stories, ground footprint smaller than N square feet, etc--and then provided for approval by-right (i.e. if your project meets those restrictions, you're automatically approved), then most areas suffering from severe housing supply issues would be in a dramatically better situation than they are now, California especially.
But NIMBYs won't accept approval by-right; they want every project, no matter how small, to go through the same endless gauntlet where every interest group or interested party effectively gets a veto based on whatever imaginary impact they can think of ([insert comparison to security theater and fantastical terrorist threats]), with predictable and deliberate results.
Just because a project was approved by right doesn't mean that NIMBYs won't file a lawsuit against you anyways to find some reason to get the project canned.
https://la.urbanize.city/post/forbidden-city-how-los-angeles...
https://www.nytimes.com/interactive/2016/05/19/upshot/forty-... (archive of same without paywall: https://archive.ph/mvLpO )
As an alternative, a 1.5 level (per apartment, a ramp, stair, or interior elevator) design where one side has 2 floors and the other just one, such that three floors are split among 2 floors of buildings. I'd still want enough acoustic insulation and isolation to enjoy silence, and an airflow design for the whole building that keeps all the exhausts and smells away from all residences.
https://slate.com/business/2021/12/staircases-floor-plan-twi...
Also I very much doubt your characterization of properties in Germany. I'm sure there's a wide variety that broadly resembles what we see in all developed urban areas.
The US uses wood construction a lot because it's a cost effective local material. Fire safety standards in the US are generally quite high. Building with wood is not some sort of problematic thing as you imply.
Seriously, the weird chip on the shoulder some people get about the US is tiresome. Sure we have some stupid laws and bureaucracy like anywhere, but we're not aliens with pokadot skin or anything. I assure you people are pretty much the same everywhere.
Most of Europe allows single stairway buildings. Germany has half the fire death rate of the US. It’s the US (along with Canada) which is the outlier in multi family building design here. They could be so much better!
https://slate.com/business/2021/12/staircases-floor-plan-twi...
The annoyances I'm talking about aren't substantial criticisms, they're just stupid. "Oh no, the US makes buildings out of wood, how silly of them" is just people being both ignorant and shitty.