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In their own houses. That's what cooperatives are for. Also prices would drop once speculation on housing is no longer profitable.

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How much do you think prices would drop? Sure a lot of supply is now on the market, but for buyers it's "20% down or your sleeping in your corolla".

What about people living in an area temporarily? People who just moved?

Honestly, these ideas come across as you personally being ready to buy but wanting a lower price rather than wanting a more sustainable housing market.

This is 90% of internet suggestions. Lots of people want to buy and don't really think through the second order of their consequences (which largely fall on renters, in the end)

No need to speculate. Other countries than the US do in fact exist and all these questions have already been answered.

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