It's just hipster hubris. If someone suggested building apartment blocks with the same square footage as those twee little houses, they would be accused of trying to warehouse the homeless, but it's actually a much better idea.
There's still the problem of services / jobs, of course. But that's a bit separate.
Of course, it's not as simple as that. Greenspace is important, which is why cities have parks.
It's ridiculous to suggest that services/jobs don't hinge on high population densities and efficient use of space.
And don't forget the very large paved roads to accommodate lines of parked vehicles on the side of the road (because naturally once you have a garage you just hoard crap in it and then park your three cars on the street) and all the armored tank SUVs passing between them.
A parking space is 9 foot wide and 18 feet long call it 10'x20'. So you can go 3 deep with hosses and give them 30'x30' plots + 10'x20' parking space each. That's 120' for 3 houses, 20' for parking spaces then 30' of road and then parking + 3 more houses on the other side = 6 houses per 30' of road. Per acre that's 6* 43560 / ((30 * 3 * 2 + 2 * 20 + 30) * 30) ~= 34 houses per acre and 640 * 34 ~= 22,000 houses per square mile.
For comparision DC has a total population density of 9,800 people per square mile.
PS: Granted that's exluding work, shopping etc, but only 10 cit's in the US beat 22,000 people per square mile: http://en.wikipedia.org/wiki/List_of_United_States_cities_by...
IMO low cost housing is about more than just poor people. Condos are expensive for young professionals, so a cheaper option with a reasonable commute could be very useful financially.