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I don't think this is psychopathy. I think this is a way of saying that if people want something, that doesn't imply we should necessarily make more of it. Maybe we're ok keeping things as they are. (I disagree, but it seems reasonable to me.)
Does this just apply to housing, or other basic necessities like food, medicines, clothing? 
I think it applies to other necessities too. People can want more Coca Cola, but Coca Cola can choose to keep its price above the cost of production. This results in less Coca Cola being enjoyed, but more profits for the owners of Coca Col production.
Is Coca Cola a necessity?
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