The basic premise is wrong. An increase or decrease in the value of a house (or a stock or a painting) is not a profit or a loss if the property is not sold. If you stay in the house during a market downturn you have lost nothing. Don't believe me? Try to get the IRS to accept a loss on your next return if your home value dips below what you paid.
OK, now I understand were you are coming from.
You are talking about accounting losses and profits, and you do speak of those correctly. As you have probably heard in your first accounting (or economics) course, accounting losses have very little to do with economic losses.
When you hold an asset for a month, you are essentially decide to buy it every second of every day of that month. In other words, if you are rational and did hold it for that long, it means that it was the best choice at all of those instances of time.
In the case Hildy brought up, this is clearly not the case. If you bought a house a year ago for $600,000 and now it is $400,000, you hold a house that you can sell for $400,000. If you did not buy that house and held $600,000 in cash for a year, you could buy this very house today for $400,000 and have $200,000 in cash left. These 200,000 you've lost by buying the house. It matters not what you do from this point onward: you ARE $200,000 more poor. Hildy was correct thus.