I think the calculations here can get a bit complex, and you don't often see the full argument made. Let's say you buy a house at price 100, and the market dou

I think the calculations here can get a bit complex, and you don't often see the full argument made. Let's say you buy a house at price 100, and the market doubles bringing the price up to 200. If you then sell and move into a house that was 120 and is now 240, then you've got to find 40 extra for the upgrade instead of the 20 extra you would have paid absent the price change. That might hurt in the short-term, but in absolute terms your asset is worth a lot more, so you're winning. And depending on how much of your mortgage is paid off, you could be ahead in the short-term too; if you have paid down 25, when you sell you get 50 back to put into your new mortgage, and that more than covers the increase in cost of the upgrade (you got 25 profit from the market movement, and had to pay 20 extra for your upgrade, so you're up 5). Not to mention that if you don't decide to move house, the nest egg that you're leaving to your kids (or sitting on until you downsize later in life) just doubled in value. As you can probably see it would be easy to construct a set of parameters where the short-term price change hurts you (e.g. you're moving before paying down much of your principal), but property owners tend to be optimizing for the long-term gains.