You rent out or naturally. If most buildings in a given area are rented out. Then the owners have leverage on the renters.
If there are more buildings than people who want to live in them, then the owners have no leverage. They have to compete for renters. You make that happen by building more housing.
If there are more buildings than people who want to live in them, then the owners have no leverage. They have to compete for renters. You make that happen by building more housing.