I think you made a lot of good points, especially the part about "distribution based on population".
While the housing districts expansion is a solution but it's a solution that only attempts to solve the problem on the surface and not trying to solve the root problem.
This is not to say that they haven't identified the root problem with housing nor do they not want to find it. It might just be it's "easier" to just throw more plots at the players.
However, if this is the only solution that the dev team is willing to make (with auto demolition being the same kind of solution as it only frees up the plot) then it just shows how irresponsible the dev team is regarding the issues around housing.