Why would it destroy value? If the area around my home develops into a booming area, some developer will want to buy my home and build something bigger on it. These low-rise buildings must be bought and replaced for the "build, build, build" to happen. The only way this could backfire for some is if the building boom starts and then the economy collapses and the boom never returns. Now you have an old house surrounded by high rises and rent is low because of the surplus that was built. That seems very unlikely though. To me the bigger threat seems to be that some other place with fewer NIMBYs will outgrow SV because of the artificial limit imposed by the NIMBYs.

Sure, some property owners will luck out in the way you're describing. Their lot will be bought out to develop a high-rise.

But it's just as likely that the lot next to them will be bought for development, and theirs will be passed over for the foreseeable future, or that the only reason anyone lives in their suburb is because of unreasonable prices where people actually want to live.

Now their property value will plateau or fall as demand for housing falls due to new development happening elsewhere.

In the long term it's likely that everyone involved will win, but many property owners just have a 10-20 year horizon before they'd like to sell, and might correctly foresee that a deregulated zoning policy might lead to a growth slump in that time frame if the supply doesn't continue to be artificially restricted.

And that is why incentivizing real estate as an investment vehicle exacerbates the housing crisis. Misaligned incentives at the local level means that heavy-handed state measures (SB 827, OP's proposal, etc.) is likely the only way out of this mess.

There's plenty of potential ways out of the mess, but pretending that the status quo is uniformly bad and just needs to be fixed isn't going to help.

The entire reason for why there's a problem is because the current state of affairs is awesome for some people (existing property owners) and bad for pretty much everyone else.

Saying it needs to be a state law is just setting up a different variant of the same intractable problem.

Who's going to care to lobby more when such a law is proposed state-wide in California? A bunch of property owners in SF/LA sitting on a million $ in assets, or potential future California residents who don't even live there because property prices are insane now?

To complete the thought, if government did allow a massive increase in housing supply and all those voters “lose” that money, the associated politicians will be gone in a heartbeat. So while the NIMBYs start this, they’re enabled by politicians in fear of their phony-baloney jobs.

It will take state level intervention. The voting population of the city of San Francisco itself has enormously outsized influence on the regional economy due to their ability to control development within the borders of the city. But they constitute nowhere near the majority of the population of the Bay Area. At some point (ideally) their state level politicians will just get steamrolled by the representatives of the rest of the state's population, and most of their power to control local development will be stripped away.

Presumably the opposition to that won't just be Bay Area NIMBYs, but anyone living in California with an interest in the state not dictating zoning policy to local municipalities.