Sorry, but I don’t get the trade up scenario. Say you buy a condo at the bottom (good luck calling the bottom though). Then it appreciates and you walk away with $200k in profit. Then you go to buy your dream home. Well, guess what, while your condo was appreciating your dream home was appreciating too, and maybe even at a faster rate than your condo. How are you any better off? In fact, your tax basis will be that much more than it would have been years ago on the dream house. Yeah, I guess you could buy a few low end properties with suicide loans and cross your fingers for the highly leveraged appreciation. But unless you are rich already, if that plan goes south you could be financially screwed for decades — like half the people in the inland empire and southbay are now.

Now, if your salary goes up substantially faster than inflation in the intervening years of condo ownership, then the trade up could obviously be doable since you can handle a bigger mortgage.