Agreed that there's additional margin we can get with less restrictive zoning, but land is ultimately supply constrained. More importantly, high-quality (previously defined as arable, now defined as "close to good jobs/services") is certainly constrained as a matter of physical distance.
Land is supply constrained, which causes housing to cost more in urban areas because constructing taller buildings costs more. But the limit on housing supply even in urban areas, absent restrictive zoning, would be that construction cost at any plausible level of demand.
We know how to build 100 story buildings but there is no place on earth where you can find a hundred square miles of nothing but 100 story buildings.
