Just because the current residents don't want it doesn't make their opinion right. If the current residents said "well we don't want anyone of [race]", we wouldn't just go, "oh well it's their neighborhood, guess they get to decide!"

There's a housing crisis, and yes, many residents are using democracy to stand in the way of fixing the problem. That's bad!

Democracy for whomst?

If it's just for long-term landowners, that's a form of democracy, but we tend to not view it very favorably these days.

Current landowners are not the only demographic in your democracy. Minorities were banned from owning in many areas due to redlining.

In this case, a representative demos would need to include the people who’d like to live there as well.