Sure, more people would use them, but it doesn't mean that the majority of people would trade normal housing with dedicated bathrooms (that are used only for a fraction of the day) for that. Normal housing market didn't die when dorms were legal to construct.

The savings that can be made from living in a tiny box with a shared bathroom instead of a regular American house are extreme and are much bigger than savings from not owning a car. Do you seriously think that will convince people and we will see the death of dedicated housing units in the near future?

I ran the numbers. Car ownership today @ 15,000 miles per year costs $1,003/mo. Traveling the same distance with AV would cost $520/mo. Monthly savings are $483/mo or around $5,800/yr.

See I'd agree with your argument if the savings were small, basically nobody is giving up their car for 10% savings, but these savings are very significant. Car ownership costs are the second biggest expense for most households after rent, and self-driving cars cut this in half.

I can see many households downsizing, and instead of owning 2-3 cars, only owning 1 and replacing those trips with self-driving rideshare fleet vehicles.

Especially for the younger generation - teens today drive far fewer miles than ever, which skews the costs away from car ownership even futher. I predict many will not get their own individual car, they'll just rideshare.