Where land is dear (that means expensive and in short supply), tiny houses should not be permitted, except possibly as temporary or accessory dwelling units.
Many cities are waking up to this problem, and getting rid of single family occupancy zoning.
The answer to the housing crisis is always and only "build more apartments". Only by flooding the market with supply can we control the cost of living.
The only way we can sustainably achieve this is by making it more expensive to not build.