Real estate could be deflationary in nature similar to bitcoin. Real estate development and construction have not maintained pace with population growth, making real estate scarce(r) in supply. The main bottleneck preventing real estate from appreciating in value is wealth and wage inequality limiting the number of people who can afford to buy it. That malus to consumer purchasing power and demand could devalue real estate below its actual market value.
You've got it backwards. The actual market value is based on real supply and demand. Houses are only worth what people are able and willing to pay. Similar to Chinese ghost cities, just because you build them doesn't make them valuable or in demand. If a house cost you more to build than what it can sell for on the market, you've just made a poor investment. That's all.
There could be correlation and causation between unaffordable assets and deflationary paradigms.
I'll give you an example. Healthcare could be considered deflationary in ways which leads to it being unaffordable. The doctor to patient ratio in the USA is something like 1 doctor for every 1,000+ patients. Wheras other nations are luckier to have doctor to patient ratios nearer to 1:300. In past years america's doctor to patient ratio was lower. In a sense we have a situation where there are fewer doctors in terms of overall patients similar to bitcoin rewards halving.
Real estate is identically inflationary in ways. Imagine what would happen if the human population doubled while the amount of homes, apartments and living space remained the same. Real estate would become a scarce and somewhat deflationary asset similar to doctors in the US becoming scarcer in a somewhat deflationary format.
I hope that clarifies things. Not certain where you disagreed with me, here. It seems as if we're both saying the same thing.
It was just about this idea of "market value." I'm a big believer in markets as the most efficient way to distribute assets, goods, services. My overall take is that, to give an extreme example, if we have a society where no one can afford housing, that suggests the existing housing has little market value. If there is no trading volume or liquidity, if there is zero demand, there is no provable value. You can offer it for sale but if no one is willing to buy, you can't argue it's worth the selling price. It's clearly worth less.
Here's an example. You have an illiquid shitcoin. Nobody wants it, nobody trades it. Just like the situation above where no one can afford housing, there is no market demand. Does it have value? Of course not. An asset only has as much value as someone on the market is willing to pay for it. Maybe you spent an absurd amount mining this shitcoin, but that doesn't make it valuable. To me, that's the same as spending an absurd amount building a house no one can afford to buy.