I suspect that helicopter parenting is a much larger contributor than physical isolation. We have had sparse suburbs in the US since at least the 1950s, and generations of kids grew up in that environment and did just fine.

It's hard to tell. You have to wait a generation or two to see the long term effects, as people will still have their earlier social habits.

It feels as though people slowly learned that they could get away with not introducing themselves to their neighbors, invite them over for dinner, and other activities that were once assumed.

1950s was the baby boom so is not a great example. Children per adult has been falling ever since and suburban areas growing.

It's definitely this. I live in one of the safest cities in the country, in the Midwest. The other day on some local Facebook group, I saw a mom trying to find someone to pick up her kids from middle school and elementary school every day. It was a 10 and 5 minute walk respectively that EVERYONE in that neighborhood took 30 years ago. No busy streets, nothing. Sidewalks and everything. Absolutely insane.