In our country we countered this by regulations ring fencing the boundaries and making it very expensive and difficult to develop new land. The upshot has been higher density (people split existing plots into two or three and build additional houses in backyards) But it has also led to astronomical prices for homes – US$600K would get you a basic house here (and they are not big – we talking about 1000square feet). We have a housing shortage now for a couple of decades and families are growing up in little units with no yard (sad to see). To our people, US houses are so incredibly cheap!!
Our cities have to rely on tax for revenue. Our system is different from the US, but we do pay tax to the local city on the basis of value of the land and buildings, three or four thousand a year roughly, which might sound cheap compared to the US, but here we pay very high taxes to central government, who provide hospitals, highways, education etc.
Our local cities are reluctant to allow people to develop their land because, the city would be responsible for maintaining it and the money has already been spent on other things.
The consequence is while the city is able to maintain itself,, the people are squeezed hard financially and the cost is rising while the quality of life is falling. Restrictive town planning is probably not the answer for you.
Not sure Detroit is a fair example. That city was decimated by the closure of GM. The city’s population dropped through the floor leaving Detroit with a surplus of property which crashed values, people unable to sell their homes, loan and tax defaults. Essentially the city started eating itself. Got nothing to do with urban sprawl, but everything to do with significant risks of economic decline for cities who rely on a single industry – the States are full of such places.
I would argue that the increase of suburban poverty has more to do with displacement of poor people from expensive inner city areas. San Fran as an example. Once upon a time the inner city was considered cheap and dirty and the home of the poor, However these inner city places are now popular and expensive and so are being gentrified and the poor are being displaced to the cheaper suburban edges.