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I mostly agree with you, but:

In a market with a population growing faster than the supply of housing it is possible for there to be no place where values fall, and in fact for people who can no longer afford an improved neighborhood to end up homeless as a result.

This is why housing supply is absolutely critical, and as a society we should be working hard to ensure we always have supply in level with (or erring toward slightly exceeding) demand.

However, we have a cultural myth that the home is a persons primary investment and wealth accumulation vehicle. That Mrs. very harmful because it creates enormous incentives to do the opposite: restrict supply as a way to ensure that the people who already have a home are guaranteed a good return on their “investment.”

It’s true that home is a very large asset and that appreciation can benefit the individuals who live there, there’s nothing wrong with that at the individual level. However when we choose to have house appreciation as a significant goal at the societal level, it directly competes with the desire to end homelessness and see everyone housed.

If ensuring that everyone could afford at least adequate shelter was a primary goal for society, we would need to make choices that sometimes worked against, or at least did not help, home appreciation.

It’s likely a net positive for the world, but a net negative for the people displaced. That’s why gentrification is a dirty word in many communities. However, like most things it’s complex.

One often overlooked benefit is the knock on effects of gentrification are real improvements in local school systems. Looking across decades you often see gay communities which care less about local school systems acting as a catalyst by increasing local revenue while reducing the demands placed on local schools. The improvement in local schools precedes people’s awareness that the schools have improved. Similarly, many people can leverage the improvements in the local economy to keep up with the transition.

That said, relatively few people can keep up with significant changes and those people are simply worse off having lost an affordable community which they had social or economic ties to. A restaurant for example is generally different to relocate. A local handyman may have a steady stream of existing customers, which don’t follow them etc.

Whether it's a net negative for people who get displaced probably depends on their capital gains from the increased property values, no? Not everyone loves their neighborhood, especially if they aren't in great condition.

It’s assumed these people are renting. Homeowners only really face property taxes which take extreme shifts to become unaffordable. Even then owners can generally remove equity to pay them for years to decades.

In simple terms, improving a neighborhood increases the supply of good quality neighbourhoods and therefore reduces the price of good quality neighbourhoods (given that the demand is more or less constant).

It also decreases the supply of bad neighborhoods. Given that demand is more or less constant, this increases the cost. If the price gap is sufficiently large between the two, prices go up during gentrification and the poor have to move to more expensive bad neighborhoods

If you're only concerned about the average quality of housing your argument makes perfect sense, but if I understand you correctly you're casually brushing over people (your neighbors) being forced out of their homes.

> (2) it will hurt people who would prefer low quality and lower price.

Uh... poverty isn't a preference. Sure, at the margins people can choose to spend the money they have on different things, but you're positing an equivalence here between things that aren't remotely equal. It's not like suburban professionals simply choose to spend their money on expensive housing and infrastructure where their inner city compatriots have different priorities. Poor neighborhoods are poor because the people there HAVE LESS MONEY.

You fix that by fixing the inequity, not imagining a fantasy resident who decides to put all her money into bitcoin or whatever.

To be fair, I know at least a handful of people who are not in poverty but seem to prefer low quality / low price options to those that are more expensive.

I would assume that the preference is not for low quality, but low price. That is, if better quality housing was available for the same price, I don't see why one wouldn't choose that option. But it is certainly true that some prefer to spend less of their budget on housing.