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.