> But why is everything a competition?

For all of human existence there has been competition for limited resources. Until all resource scarcity is eliminated competition will remain in the natural world.

90% of the world was once subsidence farmers and had very little to no competition.

That's one theory.

Counter theory: for all of human existence people have shared resources and traded among each other. Yes, for truly scarce resources trade breaks down.

So is "good housing" a scarce resource on Stanford's campus? Or is their default resource allocation schema too anti-human so it's turning something that should be a simple trade and negotiation problem into a knife-fight?

America is rooted in capitalism, so the resource allocation schema of scarce goods (e.g. nice homes to raise families in) is indeed a knife-fight.

How is capitalism to blame for local governments implementing various zoning and building code regulations that make it hard+expensive to build?

Because they have financial interests that benefit from making it hard and expensive to build. People who own property will lose property value if there is less scarcity. And government workers are hired specifically to extract money from permitting and inspections and application costs.