If people didn't want cheap cookie cutter suburbs they would spend more for something else.
Yeah, it's the best they can afford. Like Campbell's soup. If they had more money the homes would be larger and more unique. But that wouldn't change suburban sprawl at all.
Suburban sprawl exists because people do not want to live that close to others. It doesn't matter how nice you make apartments when a large percentage of the population are introverts and will pay as much as they can afford to have space.
The problem isn't politics or laws. The problem is people.