Yes, sewage treatment and treated water supplies are completely optional for successful development, and unnecessarily increase the price of the house that is serviced by them.
You can provide you own protection, so you don't need the police (I'm actually half-serious on that), and firefighting is just a scam. Why, I bet that you could find an insurance company that would insure your house without it being protected by a fire district. Heck, you don't need homeowners insurance at all! Just buy your cheap house outright, and there's no need!
And zoning laws? Who needs them! People can live just as comfortably downwind of a sewage treatment plant or an oil refinery as they can by a lake! It's a scam, front to back!
And to answer the poster's original question, why is housing so expensive, read Adam Smith's "The Wealth of Nations." Even if you just pick it apart, and read the chapters you want, it's a fascinating description of .. well, the wealth of nations. Rents are part of that equation, and he covers it.