If all the things you describe came to fruition, the current residents will have to live with the consequences of their decisions and suffer a lower quality of life (which they don't want to do), and the problem would resolve itself.

Or in reality, desirable locations remain desirable, and the current residents who had a hand in making it desirable have a right to prevent a reduction of their quality of life for the benefit of people who would prefer to live there but are unable to successfully compete with others in the housing market.