> 1) made for high-income dwellers, thus not reducing prices, because the high-income and low-income housing markets are often effectively separate markets, like cars and semi-tractor trailors.
That doesn't seem right to me. Sure, the develpoers will have incentive to build the largest profit earning housing, which right now (because of a huge housing shortage for all pricing ranges) means building high-income housing. But a high-incomer earner that buys those stops competing for the fixer-upper middle income housing so that's good for other price ranges too. What's more, at some point you run out of high-income earners that will buy your expensive newly built property which requires dropping prices on existing built property _or_ starting to build the next most profitable housing, which is less profitable than before but you don't have a choice.
Now arguably, for all that to happen it takes time and the ability to build a large number of housing units, both of which may not be an option so I'm fine as a compromise to require for certain percentages of new housing to include tiers for lower pricing levels, as a requirement for the housing permit.
> 2) the people living nearby, do think it will drive down prices, including the price of their own house, which is their only effective form of savings.
There is a point where, as a society, you need to decide what's more important: giving existing owners 50%+ returns on their property or supporting new families moving in. As usual the answer is somewhere in the middle but I'm willing to bet it would go a lot against the current situation that the existing owners enjoy. After all, owning a house provides a lot of other benefits so as long as the increase in value covers for the cost (interest + taxes + maintenance) it seems fine to me.