I agree that the song is about compromise but I think it is about more than just housing. It is about the group/individual values of becoming like everyone else - going to a university to think the same, coming out a lawyer or doctor or other acceptable profession, joining the country club, drinking the trendy drink and raising your kids to perpetuate the same thing - rather than becoming an impoverished itinerant folksinger, forest ranger, astronomer, or other such end that was what you really wanted to be but lost sight of along the way. The houses were just a pretty "easy to get" metaphor using a striking visual image of a real situation.
It was cute little zinger of a song that has lost a lot of its meaning and perhaps relevance as a criticism of post WW2 US blahness, particularly if you can't visualize that hillside. It is hard for me to sing now because I became a lawyer that lived in a housing development, sent my kid to summer camp and university etc .. How Bourgeouis! I still personally like the song, even though I dont sing it and it isnt played much these days - - it reminds me of the arrogance and idealism of my youth when I could act like I could change the world and control my own destiny - so basically the song now is about me and I dont mind the criticism.