Good article, but the author fails to mention the “L” word – Leverage. One can (or could?) buy a $300k house by only putting down 3% ($9k). So if the house appreciation yields 3%, that’s 3% on the whole $300k ($9,000). Which actually comes out to a 100% return on the investment ($9k down payment).

Hold on there, this isn’t E*Trade we’re talking about here, it’s a house — after your transaction cost of 6% to sell the place ($36K), you’re actually $27K in the hole. And of course that appreciation knife cuts both ways, so a 3% decline is gonna hurt a lot more on a leveraged investment.