yes, the value of upzoning accrues to land value, not the real property that sits on it, but the rest of your conclusion doesn't follow.

when demand outstrips supply adding a different type of supply (like an apartment building) won't depress prices materially (for detached single family residences). they're different market segments.

also, you don't need to tear down the home to realize gains, since, as you yourself said, the value accrues to the land, not the building. the price would immediately incorporate that value, without the need to replace the structure atop.

if you also want to gain rental income, then yes, you'd need to replace the structure, but that's an investment to unlock a different income stream.