“I bought so cheap that the value of my house has still not declined anywhere near to what I paid for it.”

OK, I am the first person to admit that my knowledge of economics is rudimentary — and thank you Piggs for pounding some sense into me — but how is a house’s value higher than the price you paid for it? Did the sellers just like you a lot and sell it to you for less than competing bids? I never understand the claims of “instant equity” made by realtors, it seems to me that the value of any product at a given point in time is the price at which it can be sold. Am I wrong?

I completely understand that some people place more value in having a permanent place to live for the long term and don’t view their purchase of a home by strict investment standards, but I didn’t get the impression that this was the type of “value” referred to in the quote above.