I’m not from the US, but I’ve heard about the housing shortage crisis as well as the commercial real-estate vacancy crisis. I’m pretty sure the US government will bail out the rich folks again.
Honestly, people need a cheap place to live, right? Why not just buy a commercial property about as big as an ideally small home and call it a day? Isn’t that a win-win situation? Or are there laws that make it illegal?
According to the same wiki article, the hierarchical version you mention of Euclidean Zoning (named after Euclid, Ohio) fell out of favor in the US for flat zoning, which is much more restrictive. But since it’s always locality dictated, it’s always different wherever you go.