The engineer does marginally increase housing demand. They also increase local and federal tax revenue to support education, healthcare and other services. And the engineer will spend a large portion of their salary in the local economy, helping to support all the other business in Seattle. So there are also positive externalities.

What are some of the other "many negative externalities" you mention?

I feel like we could have the best of everything if you we just built more housing to keep up with demand.

It's just a never ending balance problem. Also the "just build more housing" is such a numbers only view. Anecdotally, everyone I've talked to hate budget cookie cutter apartment complexes; they're ugly, neighbor problems, noise, pets, etc. What people really mean is they want a single family house sitting on land, but you just can't have both.