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First, this is not something that routinely happens for traffic mitigation projects. Second, people who get eminent domained are compensated for this, typically more than their house is actually worth. Third, this is just as much of an argument against densification, upzoning, and public transit: those also displace people.
Somehow I knew without clicking that this will be a link to Strongtowns. I knew it, because nobody else is making this argument, and this is because their entire argument is completely bogus. I wrote about it years ago, see also this more detailed one.
Here's one more reason why it's entirely wrong: observe that every year, dozens of new master planned communities crop up. The development of these is basically entirely funded by the sale of the properties. The developers can't just come to some adjacent or local government and ask them to just build roads, water mains, electricity lines etc. This is not paid for by "someone else", it's the homeowners themselves who cover all of this cost, when they initially buy their new construction houses, and then later when they pay property taxes and/or HOA fees. Local governments do not build stuff for the developers, typically they actually ask developers to pay extra taxes and fees, labelled as "impact fees" and such.
What externalities, exactly? On whom they fall? Where is the assessment that honestly tries to measure these, balance positive vs negative externalities, and compares to the balance of externalities of any alternatives? I've never seen anything of this sort, at best I see tendentious, motivated reasoning of the StrongTowns variety, one sided assessments that only calculate costs, do little to actually determine who pays these costs, and does not even attempt to assess the benefits.
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