Leverage is the key. Someone could buy a $200k house for $20k of their own money in the form of a deposit for a mortgage. Now say house prices go up 4% a year (so probably less than S&P) for 5 years, while the mortgage interest is 1.5%. So they will have paid in approx $70k, and gained nearly $30k in asset appreciation. That's a 40% return on your cash, and you've not had to pay any rent!