Wow, what a fascinating thread to read through.
So, standard disclaimers before I wade in - YMMV, IANA (Lawyer, Expert, CPA, Professional, yadda, yadda, yadda)
First the idea that a primary residence isn't an asset is just mind-blowingly off base to me. Granted, it's a great contrarian take that helps RK, DR, and others stand out from the crowd, but believe it or not there often is a lot of collective wisdom in the standard operating procedures (and some major mistakes which is why no one should just blindly follow the herd - but you all should probably wear a mask).
For many people a primary home is the major asset in their portfolio, and the only one they can leverage in interesting ways prior to retirement. Some people have already touched on some of the things people can do with primary residences: force appreciation through smart reno, house hack, room rent, HELOC, tax exemptions and mortgage interest write-offs. A renter, while they may have slightly more cash on hand to invest in the short term, often loses out on the massive wealth building tools afforded by home ownership in our society.
Over the years my wife and I have added major gains to our asset portfolio through the cap gains exemption alone. In 2014 we made $75k on the sale of our the first home we bought (2br apt in NYC). And we are about to close on the sale of our previous apartment (3br/2ba NYC apt) which we did a major reno to and will take home about $250k. That's $325k in profit, all tax free, in 6 years. We've moved to NC recently, and are looking at doing some major value add renovations to our house here, which we think should add about another $200k in equity value once we are done, and the appreciation here will likely add even more. Chances are we will stay here for at least 5 years, but regardless of when we decide to move, we know we will have another large chunk of tax free profit to reinvest should we decide to sell our current home again.
But, this is all simply one strategy we've used to build up wealth, and highlights only one area of our overall asset portfolio. The smartest investors I know of think more carefully about spreading out their risk, building safety nets, and never over-extending themselves too far on any single risk. For us, that means that home ownership is one tool we've used to build an ever increasing wealth portfolio. For example, I've worked almost 20 years in a union job and have build up some great retirement benefits, that has taken a huge amount of pressure off us as we think about how to use the resources we have today to maximize our returns. My wife has a very well paid position at this time, and we've been maxing out her retirement contributions, and then looking to save even more in various stock and bond options. We also make sure the only debt we carry long term is related to real estate and we never take on more debt than we have the assets to pay off in case of emergency. Credit cards a tool we use to spend efficiently and build credit scores up. We do not carry balances on high interest cards (we may do that on zero interest cards for short time periods to smooth out cash flow (like when we bought new appliances for our house) if we have the savings to pay off the balance).
We're not rolling in it Scrooge McDuck style by any means, but we are at a place now in our 40's where we are beginning to enjoy the fruits of our labor and sacrifices made in our 30's. And I also know that our circumstances can be illustrative (and hopefully encouraging) to others, but we're just one example and our situation is not directly applicable to anyone else. There is no one size fits all strategy that will guarantee a stress free, FIRE lifestyle of ease and luxury. But there are definitely way everyone can leverage what they have at this moment and build smartly for the long term. A primary home is one tool that can be used really effectively, but it should never been your only tool. That's like a carpenter who only comes to the job with a wrench in his pocket.
