Hah - first thing, trying to reply to this thread from Firefox, is unresponsive "retreiving data...".
I had this problem, I think it might be a (new) Catalina file system access permission issue.
Here is what I suggest:
0. note the default folder that where it is trying to create your project (In my case "development")
1. rename said default folder to a different name
2. restart Xcode, try to create new folder, if you see it default to "Documents" directory and prompt for permission, you are done
3. otherwise, delete the derived data folder, restart and re-attempt
I did both these steps at once, got the prompt and it worked, but I am not sure which one was the cause, but I am suspecting a bug in not prompting for file access permisssion. (It could further help it someone identified which of these factors fixed the problem)