Space is not just space. Space has qualities such as non humid climates, near mountains, beaches, access to potable water, and of course, political considerations.
Also, people like more space than less space so incumbents will fight against others coming in, unless the others are bringing benefits such as money or labor for the incumbents.
People underestimate the positive impact of this solution.
It's not like we don't have the space. All that's lacking is the will.