...or sell it? Today if I bought those houses at fair market value, it would still be illegal for me to build a 6-7 story apartment in their place.
People will sell their homes in the market, as they do today. Today it is illegal for a buyer of such homes to build multi-story apartment buildings in their place. The argument is to simply allow such construction to happen.
You have a strange definition of "force".
For example, here in Chicago the value of land downtown is upwards of $40 million per acre. It has nothing to do with the location of the land or that we're completely maxed out for development. It has everything to do with the fact that you can build 250+ units on that plot of land.
Real estate always has to do with the location.