If dipping into retirement savings allows a young person to buy a house and start building equity and lessening the burden of future costs of shelter, while continuing to save at the same rate as before the extraction from retirement savings was made, why would that not be a boon in the long run?
For many young people, even reasonable shelter costs preclude much savings potential anyway. It could be looked at in a different way than you are patientrenter. Getting started when one has no or little retirement savings is a boon as compared to having enough retirement savings to actually buy a house, as you seem to be suggesting, before doing so by credit.
The rational purpose for buying a house seems to me two fold , first getting started towards reduction in future shelter costs and second forced savings. With rent/buy parity this is extra savings above what could be accomplished with renting alone. While rents could drop temporarily I would still gamble that rent inflation and other measures or inflation would continue to benefit the buyer. Dipping into retirement savings to bring these benefits to one’s life, if necessary makes complete financial sense to me. This is especially true if basic housing makes saving difficult, as it does for most young people.
Also, I don’t see how one buys a house without dipping into retirement funds, even by paying cash? To me its all just individual wealth , strategically apportioned according to individual parameters. A mortgage can be an important part of diversification or initially instead of diversification, for some, if that what it takes to get started.
This is a different answer of course as to whether or not banks should lend to non-savers. I favor that they do for the reasons above.
