I feel your discussion uses the wrong metric. The appropriate level for measuring wellbeing is national*. If making a comparatively small number of long-term city residents in a little worse off improves the lives of many citizens of the nation it should be clearly worthwhile.

Many cities have obvious low-hanging fruit. SF is full of 1-3 story housing that could easily be made much denser.

Instead we've created a system where the lucky few whose parents bought housing years ago in desirable areas inherit a ticket to opportunity in a city. That's fundamentally contrary to the ideals of the American Dream.

*Well I actually think this should be global, so I support open borders. But that's a tangent here.