We should buy housing to live in, not to extract rent from the suckers that were too late. A land value tax would help lower prices and remove the incentive to treat housing as an income source.
This is a really biased view of what landlords do. A landlord takes on all the risk of maintaining the home, staying in the home long-term, fixing things when things break, etc. As a renter, being able to just tell my landlord when things break means that much more convenience for myself. Moreover, as a renter, having no incentive to be gentle on my appliances, my landlord actually does quite a bit of stuff (Or pays a lot to have someone else do my stuff, hence creating a job) to make my life pretty darn easy.
Also, I'm not sure what "devaluing" is going on; by pure financial value there's almost no way to build enough to actually drive down the price of any individual home; more likely as zoning increases the home will go up in value, but individual condos or townhouses will be available for much less than a single family home.
If you mean "devaluing" by "I now have apartments on the block," there's absolutely no right whatsoever for somebody to control the use of that other property.
This ... kind of ... happened in Southern California in the early 1990s when the defence industry retrenched. SoCal housing prices had long led NoCal, and in the aftermath the south's values fell by a third or so. They've never really caught up. A different dynamic but similar result. Oddly, a consequence has been somewhat greater densification of the LA basin.
You could look at real estate in other and earlier times, especially industrial or extractive areas after the boom has passed.