the problem is that all supply is not equal. in the classic NIMBY case, we’re talking about single family home owner in a neighborhood that has high housing demand, meaning it is largely built out, and they are opposing the introduction of multifamily housing to their neighborhood. in order for new multifamily units to come online, this means that over time existing SFH units are being converted/redeveloped into multifamily homes. this means that at the point where NIMBY pushback starts to matter, the number of SFH in a neighborhood has already largely peaked, and that the supply of that type of home will only ever go down and become more scarce (especially as a percentage of overall units). as more people move into a neighborhood in new multifamily buildings (and bring jobs, businesses, services, and general opportunity) the demand for that neighborhood goes up as well—demand is not fixed, and often goes up with supply, and depending on other macro factors can even outpace it if the agglomeration benefits are working properly. in this case, the NIMBY’s SFH value goes up, because the land value is much higher due to redevelopment potential, and also because that type of home is scarce and highly desirable to wealthy people who want proximity to opportunity in an urban place with the privacy and luxury of a detached SFH.

tl;dr: “while demand remains steady” is doing a lot of heavy lifting that doesn’t really make sense in a real dynamic urban system.