Not necessarily. That may be the case with the lower end models, but my wife's 2 year old iPhone was only worth $100 when trading in to the 12. Meanwhile my iPhone 11 Pro Max was worth more than $500. I don't recall the exact math, but when I did it at the time, upgrading both years came out narrowly ahead. This could have been a one time fluke, however. I don't care about the economics from it as long as it is affordable to me. I absolutely would not pay $800+ every year for a new phone, however.
Just checked and if I bought an iPhone 12 today (since iPhone 13 can't be ordered yet but I assume the trade in values will be the same on Friday) I'd get $790 trading in a 12 Pro Max, $500 trading in 11 Pro Max and $320 trading in an XS Max.
Since the Pro Max has been selling for $1100 the last few years that means it depreciates $310 in year one, $290 in year two, and $180 in year three.
So it costs you $310 plus sales tax on $1100 to upgrade every year - let's call it $380 since I'm at 6% sales tax. $600 plus tax to upgrade every other year - call it $670 or $335 per year. $780 plus tax to upgrade every third year, call it $850 or $283 per year.
I actually would have thought it would cost more to upgrade every year. The intangible this doesn't account for is that having a newer phone carries a bigger risk if you drop it and break the glass. I checked by answering as if I had an 12 Pro Max with a broken screen that is worth $790 otherwise and Apple won't even take it as a trade in - their page says they'll recycle it!
I checked Gazelle and it would be worth $178 (versus $435 in perfect condition) over a $600 hit from Apple's trade in value! Clearly getting it fixed for the $329 Apple charges would be a better deal, but still a $300 hit. iFixit charges $549 for a new display for the 12 Pro Max so DIY doesn't make sense unless you can get a display for less than they charge, but maybe some random mall kiosk can do the replacement for less than $329 though whether Apple would give full trade in value for a phone fixed by some rando I don't know.
Now while I've dropped my iPhones onto concrete a few times over the years, I have never broken a screen (knock on wood) just scuffed the corner/edge a bit so I don't worry about that too much even though I never use a case. But I'm always worried about it anyway the first few weeks I have a new phone - ever since I had my iPhone 5 replaced under warranty (the power button issue) and I was happy because I'd dropped it and got some scuff marks on it and I dropped the replacement not 20 minutes after getting it while exiting a cab lol! My heart sank since it landed face down, but luckily no damage.