I think you should double-check the numbers on this before you assert something is easily done. I live in NYC--are you saying we should live in half the space that we currently live in? A 400sf 1BR apartment should now be a 2BR apartment? Please draw a functional layout for this apartment.

And to what end? The population of NYC is ~8 million. You think the population should double? Where are all of the new people moving from, and what should we do with the houses they are currently living in? You don't need to double the total supply of housing to dramatically affect the housing cost--you just need to increase the supply of housing for the people who are looking right now, which is a much smaller number than the total number who live in the city.