You're absolutely right, it would change the character of the neighborhoods. But the argument you present is exposes the hypocrisy at the center of people in these neighborhoods and hits at some of what Giridharadas is getting at.

I suspect many of the generalized Seattle NIMBY's champion affordable housing and decry gentrification, but when the rubber hits the road and they are asked to give up something (neighborhood charm) to actually do something about these problems (increase density to lower housing costs), they actively fight against it.

"I like affordable housing as long as I can still live in the same neighborhood and don't have to give anything up."

Don't forget they also only like it as long as the value of their properties continues to raise. Can't be going underwater on your mortgage from buying in a bubble in the name of cultural diversity or fighting poverty.

Would increased density actually lead to lower housing costs though? My initial thought is no, especially in a major city such as Seattle.

Increasing the supply of housing should lower prices, yes. In nearly every neighborhood, single family, detached homes are the most expensive form of housing.

There is an effect where improving the consumption benefits of the city may draw new migration from other parts of the country, but it is generally accepted that this effect is much smaller than the effect of increased competition between landlords and developers.

If you think that housing somehow operates differently from a normal market - increasing supply will not change the price - it is incumbent on you to explain why you think this might be true.

Possibly what the grandparent was thinking of is land values. If a neighbourhood is rezoned to allow more density, one would be able to build a duplex or low-rise condo/apartment building where there used to be a single family home. This makes the underlying land more valuable, while probably also making the per-square-foot cost of housing go down. I also suspect as more SFHs get turned into more dense housing, the scarcity of SFHs would make their value jump up as well. One thing that could counteract this would be if property value assessments rose enough such that it became very expensive to own a SFH on land zoned for density, which would encourage most owners to turn them into more dense housing. Though possible one house in a 'hood of low-rise buildings would be less desirable and would only be sold as a teardown. Either way I figure more density would overall be a windfall for landowners (read: homeowners) even as housing prices drop.

Why would supply and demand not apply to Seattle?

People in small neighborhoods tend to value the charm, convenience, and connection they have with their communities. I don't want to pretend things won't change, but those qualities can be preserved even as a neighborhood gets dense (Brooklyn might be a good example). Plus, there are additional benefits (transit, shops, services) that tend to come with density.