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.