Lack of housing can sometimes add stress to infrastructure, by forcing people to move farther from their work. This explains the bulk of bay area traffic, as people drive from the ever-sprawling suburbs to SF or Mountain View, where housing is scarce. Build housing where people work, and those train or car commutes could turn into walking commutes.
As for water and electricity, newer buildings are significantly more efficient than old ones. I’ve not heard this would be a real bottleneck, and it’s not like water and electricity systems are overloaded in denser areas of SF today.