The development you're describing is the whole goal of upzoning, and the intended effect. Where you once had a single family home, you now have multiple units.

The brand-new townhouses sell for many millions because they're brand new. But adding new units relieves price pressure on the rest of the market - every person that moves into a brand new townhouse is therefore not moving in to older houses in other neighborhoods.

You're making out like a bandit because you're creating new wealth. Where there was only one housing unit, there are now many. This is a win for everyone involved, it's net positive.

> Housing pricing is more complicated than a simple supply and demand curve

People say this, but it's not true. The U.S, particularly in growing areas, has not built enough homes per capita since the real estate bubble, and so prices go up[1]. It's as simple as that.

[1] https://www.businessinsider.com/us-underbuilding-housing-ove...