Market value comes from a decentralised oracle. I don't want to write here the most famous decentralised oracle, but right now, it provides price information to various defi protocols why not also the market value...
Market values aren't generally quantifiable though. Two houses on the exact same street might be valued slightly differently because one has some original features, or one has historic significance. Unless your decentralised oracle factors in all or the unique aspects of an area and a property, it's not an accurate representation of the value, and as I said before market valuation isn't something that dictates a purchase price. If the paper valuation of a house is 500k, I am well within my rights to give it to my children for nothing, or to sell it to a local person for below cost because they have a unique interest in the property that I agree with.
Let me tell you something obvious. The credit system is doomed to fail, and it is not working. This blockchain thingy, defi, NFTs, now we might have a chance to build a better financial system. And yes, those two houses may be valued differently, but trust me, Some of the smart-ass people I know are working in crypto like there is no tomorrow. I'm sure we will solve this minor issue on the way.
>Now we might have a chance to build a better financial system.
Not with blockchains we don't. They're also doomed to fail, and not working. A system where your money loses 25% of its value in a day its completely unusable for a mortgage. Saying "I'm sure the problem will be solved" doesn't mean anything, you could say the same thing about a credit system.