Exactly. When there is a housing shortage, landlords and developers have no meaningful competition, therefore they can offer sub-par housing for too-high prices.

Build more housing, make landlords sweat about vacancy, and you'll see higher-quality units spring up like magic.

My city, Montreal, for instance, has perhaps the most affordable and YIMBY housing market in a major North American city, and the result is rents are cheap (by big city in North America standards), quality of life is very high, and landlords have much less negotiating power. For example, I was able to negotiate my rent down before moving in, and it's also quite rare to see all manner of onerous restrictions like pet bans in apartments here.

When landlords have a credible fear of vacancy, they can't afford to scare off prospective tenants with high rents, poor sound insulation, and pet bans.