This bit isn’t quite true:
Come to think of it, thousands of bankrupt developers may not sound too bad to you, either. But believe me, it sounds bad to the developers. Which is why there could never be a situation where private developers would add that many new homes at once — they would stop building long before that return to paradise could happen.
If you make sure there are many smaller pieces of land owned by different developers, they will compete with each other to build new homes before prices go down further.
It happened in London in the 1930s. Millions of ordinary people (carpenters, plumbers, etc.) were able to buy their own homes.
Even the land of developers who go bust will get developed — just by a different developer.
The key is to make sure that new development isn’t in the hands of just a few big developers.