[s_asher]

Average size of a new house in the US:

1950: 1,100 sq ft
2000: 2,200 sq ft

We're also in an "up" real estate cycle, so using today's housing prices is somewhat biased. My friend bought a new 2 bed + loft condo in Orange County, California in 1998 for $135,000. Today it's worth $400,000. $135,000 is about 2x his salary. I told him to buy a bigger house back then as investment, but you know some people, in one ear and out the other.

[s_asher]

Three bedroom starter homes for $160,000

http://www.realestatejournal.com/columnists/moneysworth/20050331-moneysworth.html

PLACE/PRICE: Silver City, N.M. / $159,900

PROPERTY TAX: $535 annually

THE PROPERTY: This 1,353-square-foot ranch with 3 bedrooms and 2 baths was built in 1996.

DESCRIPTION: This home has a vaulted ceiling in the living room and provides mountain views. There is a sliding glass door off the combination kitchen-dining room.

NOTABLE: Silver City, situated on the outskirts of the Gila Wilderness, has one of the lowest property-tax rates in the country.

[frgoff]

I told him to buy a bigger house back then as investment, but you know some people, in one ear and out the other.

This myth really annoys me. Sure, his $135,000 home is worth $400,000 now, but so are all the other $135,000 homes in the area

In other words, unless he moves to a completely different market, the only gain he gets from his "investment" is any equity he has paid down in the home. He'll still be carrying the same level of mortgage on the new house, assuming he rolls all of his payout into the down payment.