If they put in a stipulation that the land wasn't to be used for housing, that would never happen.
Let's face it, in a perfect world, this would be all well and good, but it is unlikely to occur with politics in America the way it is. Even if such a stipulation was put in, odds are it would have a giant loophole, or be completely toothless.
Also, this assumes that there isn't abundant land for housing development as it is
Ah, but the virtue of this potential land is that it is CHEAP. Because the government would be obligated to sell it (and most likely within a certain time frame), odds are it would be sold below market value to make it happen. People will buy it just for the potential profit of selling it again later.
I doubt this changes the housing market one iota.
It might not change the urban market (the government doesn't have as much land there anyways), but it would DEFINITELY negatively affect the rural market, and especially the agricultural market. Anyone being pressured by big agricultural conglomerates to sell below what their land is worth has just lost any bargaining chip that they had.
But that's just how I see it, TNG. I hope you're right and I'm wrong.