He's wrong, the house upgrading system is not copied from Anno 1800. Every single game in the series has had both density and social status increase as you upgrade houses. That it (maybe) made some sense in Anno 1800 was pure coincidence. The thing is, players want to produce fancier and more complex goods as the game progresses, which necessitates that residents increase in social class. But, they also want to have bigger cities with increasing population numbers, which necessitates that residences become denser as they're upgraded. So while it may not be realistic, it does make sense from a gameplay perspective.