> In 2013 you couldn't say that prices have nearly doubled since 2013 under ZIRP, which is the argument that buying now would be buying high.

But in 2013 you could say they've nearly doubled since 1998 under ZIRP, and then everything you say applies.

It's also an option on continuing to live in your same COL but a different city, with a nice large house. Worse case, prices fall enough you can afford a new mortgage even if your investment is wiped out. Worst case of renting is you can never buy because houses appreciate faster than you can save. You said

> then you'd still have the entire $380k plus whatever interest it earned.

And it's not enough to buy a house if prices continue up, and you've lived in a cheap (so probably small and undesirable) apartment for years while your friends are building up their household.

> But in 2013 you could say they've nearly doubled since 1998 under ZIRP, and then everything you say applies.

The problematic number is the home price to median household income ratio:

https://www.longtermtrends.com/home-price-median-annual-inco...

In 1998 it was ~4 having been stable in the 4 to ~4.5 range since the late 1970s. By 2013 it was ~5, from being five years into ZIRP. The peak in the housing crisis bubble was 6.8. Right now it's ~7.

> Worse case, prices fall enough you can afford a new mortgage even if your investment is wiped out.

Where are you getting another down payment having been wiped out? The original down payment was $200k. It only takes a 25% decline to wipe you out and even at the lower price you'd need another $150k to get a new mortgage. And just after a crash would be the time to buy, but that's when you'd have just been zeroed out.

You might be better off to keep the existing house even if you're slightly underwater on it, at least then you don't need to sink another down payment, but then you're stuck continuing to pay the mortgage for a million dollar house when it's only worth $750k.

And there is also a third option. Suppose the prices don't move significantly up or down for a while. Then the leverage neither wipes you out nor gives you leveraged returns, but it means you're paying the interest on that $800k loan while getting no return from it.

> Worst case of renting is you can never buy because houses appreciate faster than you can save.

Which is precisely the problem with buying if that's the thing that actually happens to other people. If prospective buyers can't afford to buy your house for the high price anymore then you can't sell it for the high price anymore, so the next thing that happens is that the price comes down.

> And it's not enough to buy a house if prices continue up, and you've lived in a cheap (so probably small and undesirable) apartment for years while your friends are building up their household.

Which is again predicated on the prices continuing to go up. How high can the home price to income ratio get before something gives?