http://community.simtropolis.com/topic/67427-residential-demand-how-to-get-more/
The usual reason for low apparent residential demand is that as residential buildings level up through increasing education, they gain increased capacity. After a glut of high density residential zoning, if your education is solid, you wont see demand for a long long time, as those buildings educate and level up. It's worth noting that newly moved in cims are always dummies, apparently only an idiot would immigrate to one of our cities, so every new cim has to be educated up from zero education, this means new apartment buildings always upgrade incrementally over time.
The low demand
is not real. Demand is still increasing as normal - it's just being used up immediately filling the vacancies in the newly upgraded, roomier apartment buildings.
The same thing happens with C and I demand, but the difference is that because they are dependent on the education of the
workers, if your workforce is highly educated C and I can upgrade almost immediately. The lag time between zoning and achieving maximum capacity, is much shorter. Although under some circumstances, like if your city is poorly serviced, and you dramatically upgrade a key service, you might get a sudden huge increase in C or I capacity, resulting in zero'd out apparent demand for a while.
If you want to
see residential demand you just have to be conservative in zoning high density, remembering to account not only for the lvl1 capacity, but also for the maximum capacity.
Edit: By the way, you should be able to mostly leave taxes alone. I would certainly never put R taxes over 9%. You can get away with raising commercial or industrial taxes. On hard mode you just have to be strategic in your services. Use lots of bus because it's a brilliant money spinner and by far the lowest hanging fruit for upgrading building levels (really, once you have the bus depot, bus lines are not only free, they actually earn you money while raising building levels which dramatically increases tax income - no other service compares), use metro only to alleviate excessive traffic because it probably wont turn a profit, and passenger rail not at all. Minimize the use of cargo terminals/ports, probably about 1 per 40,000 cims assuming you make your own goods - a terminal can service so much industry, it's about 4-6 4x4 city blocks of industry, don't have more or less terminals than needed. Also get just enough incinerators to manage the city trash, use the trash view to know how many to build. Focus more on profitable services, than 'subsidized' ones. Running a lean mean economy should give you great profits at default taxes. In my hard mode city I ran a solid profit about 20,000/week with lvl6 residential. Striving for lvl6 residential actually made the city more profitable, the additional taxes outweighed the service expenses (if you think about it, lvl6 buildings don't use any more Fire, Police or recreation than lvl1, nor in practice healthcare and university, so profit margins tend to improve). I did tweak C and I taxes, but with such a large profit I certainly didn't
need to.