If all the things you describe came to fruition, the current residents will have to live with the consequences of their decisions and suffer a lower quality of life (which they don't want to do), and the problem would resolve itself.
Or in reality, desirable locations remain desirable, and the current residents who had a hand in making it desirable have a right to prevent a reduction of their quality of life for the benefit of people who would prefer to live there but are unable to successfully compete with others in the housing market.
Or in reality, desirable locations remain desirable, and the current residents who had a hand in making it desirable have a right to prevent a reduction of their quality of life for the benefit of people who would prefer to live there but are unable to successfully compete with others in the housing market.