Why would they sell a house they enjoy living in, near the school their kids attend, near the jobs they work at, in the city where their friend are? Or do you propose to force them out?
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.
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".