> a home is the largest purchase they will ever make and the bulk of their net worth

That's bad and a central part of the problem.

I accept that my car is depreciating in value every year I own it, and but I need a car so I buy one. I don't need it to be a good long term investment, despite it being a major purchase.

The entire mindset of treating a family's home as being an investment class rival to bonds and equities is a relatively new phenomenon, and one that's clearly been detrimental to many.