How about if your neighborhood wanted to keep out people of a certain ethnicity instead? Is that a democratic outcome that we need to respect?

The definition of democracy is that we hold regular elections for political office. It does not mean that every single decision in society is up for a vote at the local level. 51% of my neighbors cannot decide that they'd like expropriate my house or checking account. The point of YIMBYism is that these kinds of decisions have negative externalities and a larger group of voters- at the state or national level- are removing that decision-making power from a smaller group at the local level. This is a democratically legitimate outcome!