This is a fair point, but the analogies to vehicles don't really work anyway: they're a depreciating asset, houses are not. Even a tiny rundown place can cost millions owing to location.

But all things held equal, if you have a new house that's big and a new house that's small, the smaller one is cheaper. And further, mixed density builds will be cheaper than single detached homes. Beyond that there's nothing caked-in to the walls that makes a house cheaper or expensive. Shitty houses are just unmaintained, dilapidated. Flooding the market with houses will drop prices.

Do they? Are there any production cars under 20k? Plenty of used ones for that.