If zoning allows for building more densely (which in the US, it often does not) existing residents can trade their single-family homes for a condo in the same location + some cash. It comes down to a zoning issue in the end, not some special problem with economically developing an area.
If you evaluate the last 30 years using, for example, TV's or telephones as a benchmark, it looks like we've been amazing at everything, and capitalism is awesome. But if you evaluate the last 30 years using, for example, housing or healthcare as a benchmark, we look like a country that's on the brink of total collapse
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Part of being a free country, is the freedom to abstain completely. The freedom to walk away. Television sets or movie theatres, for instance, can never get too corrupt, or too expensive, because you can always just walk away. There's a limit to how exploitative a transaction can get on many products, because eventually people can just throw up their hands and say "fuck it, I'm out, I'm done with this whole mess".
But you can't walk away from healthcare. You can't opt-out of the housing market. As we transition to exploiting needs instead of wants, people can't opt out, so the potential for exploitation in those particular fields is almost limitless -- limited only by total income.
Just because the previous population can no longer afford to live in SF or many parts of the Bay does not mean we have a problem or someone's rights are being violated.
Yes, rich people will spend more. But this is bad for all the regular people, who can't spend that much, and will be outbid on housing+rent, schooling, childcare, entertainment, etc. Yes, rich people will pay more in taxes, but this is generally bad for all the regular people, because taxes are calculated by averages, so rich people increasing property values also makes property more expensive for everyone else. Yes, more rich people help other rich people demand higher salaries, but literally none of this money trickles down into regular people's salaries, which stay roughly locked to the same dollar figure, regardless. (See how San Francisco has some of the highest salaries in the entire US, but their regular people still had to fight just to get $15/hr wages, which in SF is insultingly low to anyone working in any line of work whatsoever).
> The pre-existing population presumably owns property, whose property has increased now because it's close to high-paying jobs
That's never a safe assumption. Lots of pre-existing populations do not own property. And even for the people who do own property, it's not like those property values actually become cash -- you can only sell out if there's somewhere cheaper to move to. Increasingly, those 'cheaper places' no longer exist anywhere.
We have people being gentrified out of their homes in my small hometown city (Grand Rapids, Mich). And they say what you've said, "who cares, they can just sell out their property, take the money and profit". But in truth, they can't do this. Where are they supposed to live? They can't afford to leave for SF, or NYC, or Seattle, or Chicago. Hell, they couldn't afford Minneapolis. They'd have to live in the literal middle of nowhere to afford something cheaper, and there's no jobs in the middle of nowhere, so it's a non-starter.
This "property owner wildcard" myth needs to die. You absolutely can (and a meaningful number of people will) economically suffer due to development, even if you/they own property in the newly developed area, and even if you/they sell that property for much more than you bought it for.