I'm not financially clever enough to figure out details but most individual homeowners have to be able to keep the value they've invested/earned in some form or it's just communist "overthrow the landowners!" wishcasting and it'll never fly. Too many people have everything to lose.
FWIW, I think it's unrealistic to think that property owners will see real depreciation in any broad sense (even in the hottest markets, I think you'd see stasis, not outright decline). I don't think we can build enough units fast enough that existing ones plummet, & the demand for SFH won't vanish.
Like, it's 100% the case that unmet demand for apts raises SFH prices, but most ppl who can afford SFHs will still want them even comes the day that there are enough apts for ppl who wan them. It's marginal units—overpriced rowhouses, distant exurbs—that are at risk, not the heart of the market.
To be clear: I think you're 100% right that the fear needs to be dealt with politically, & also that a better model for wealth-building would be great. But we're not going back to great houses selling for $90k bc of white flight & deindustrialization. That was a one-time moment.
Stasis is definitely better than 5-7% annual housing inflation. Deflation is very bad and a lead in to depression but if nominal prices could be stabilized for a generation then buying power for people who need and want affordable SFHs could catch back up.
Maybe that kind of timeline, 15-30 years, could be enough to phase in a home equity swap without too much disruption to broader markets while beefing up housing stock across the board. Add in an emphasis on breaking open mature/saturated markets in a position to accommodate greater density.