The question isn't about market value, it's about whether the homeowners should have been contacted about the problem and given a chance to remedy it (e.g. First right of sale)

The answer to that may differ from person to person, and may depend heavily on facts not presented here, such as whether the money was paid be the homeowners but didn't make it to the city, whether the city should have or did know the accountant's address was no longer good for decades, etc.

Because I support sane outcomes when this happens to poor communities, I support the same when it happens to rich ones.