(%i1) float(solve(sum(y*1.08^x,x,0,25)=1500000,y));
  (%o1)                       [y = 18760.69004076126]

It's quite possible that they did better with their leveraged housing purchase than they could have otherwise since they needed housing anyways... but they were fortunate to be in a location that went up in demand, many places barely kept up with inflation.

But raising 1.5M in 25 years is no astounding feat on its own.

The point is the above poster gave ludicrous manipulative figures saying they "lost" 400k. It's a great example of how people can sit back and be great armchair quarterbacks and pooh-pooh things using flawed mathematical assumptions but when you look at things in the real world, it all falls apart. He says based on his numbers they "lost" 400k meanwhile they have 1.5m in the bank. You say all it takes is to save 1500/month over 25 years every year and ill be willing to bet no one you know has been able to save 1/3 of their pretax income consistently every month for 25 years.

Housing is generally a great passive way for people to save for retirement. Nothing is guaranteed of course. Many people lost their savings because of the Housing bust. But that is a 5 year period of people relative to decades of people who actually prospered from it.

People don't talk in public about their finances very much, so I don't know about other people. Especially because when people realize you have healthy savings they start asking for 'loans'. Perhaps that is another benefit of owning an expensive house: it's a way to stash away value that less thrifty friends and family won't mistake for free money that you can give them.

The long term housing values are net positive, yes, but not relative e.g. to the broad stock market.

The fact that housing can be a "great passive way for people to save for retirement." is largely because they already need housing, which was part of the article.

I wasn't stating that the prior poster's figures were correct... just pointing out that the 1.5m figure isn't that impressive and that achieving that depended on historically atypical appreciation, and that it could have gone the other way.

In inflation adjusted dollars, your parents paid roughly $500,000 for their house. You said they sold it for $1.5MM. Even if we ignore interest payments, property taxes, repairs, maintenance, upgrades, and the myriad of other costs associated with ownership, and all transaction costs associated with buying/refinancing/selling, your parents netted $1MM in 25 years. Let's also assume they only put down 20% in 1987, or $100,000 in today's dollars. Under these circumstances, they doubled their money 3.25 times, or earned roughly a 10%/year rate of return. That's pretty good, if you ignore all associated costs.

Now consider just one easy alternative: The S&P 500 was at 250 in Dec 1987. Today its at 1400, meaning it has doubled 2.4 times, or earned roughly a 7%/year rate of return. The DOW was at 1750 and today its at 13000, meaning it doubled almost 3 times, or earned roughly 9%/year rate of return.

Mind you, the costs associated with investing in and holding an index fund are unbelievably lower than the costs associated with owning real property. Once you account for even a portion of those costs, your parents' real rate of return on their real property is likely to be around half of what their return would have been on just a simple index fund.

(The above analysis excludes what your parents would have paid in rent during those 25 years. This is obviously a significant factor that changes the numbers [just as all the other costs associated with real property would], but as you can see, even when returns on real property look significant [we turned $250k into $1.5MM in 25 years!], the actual return is often much, much different.)

Edit: Note that I've just purchased a rather expensive home in California within the last year, so I am "long" housing relative to what I could be paying in rent. I'm not bashing real estate by any means, only pointing out that all returns are not what they appear.

I think the person who said they lost $400K was telling you that they really could have had almost $2M in the bank today, not that they should be $400K in debt.