Buying too much house is like betting large on two pair or even 3 of a kind.
You may win. But you may lose.
Buying less house is like only betting on a full house or even a straight flush.
So you buy too much house- then you lose your job. Ruined.
So you buy too much house- then you get sick. Ruined.
So you buy too much house- then the housing market drops (as it does every recession)- and your pay is cut or taxes go up. Ruined or in a lot of pain.
The OLD game was to buy a house- let it appreciate and leverage up.
Then they got more aggressive and said it was a "no lose" proposal and you should leverage to the max.
You MIGHT win. You might turn $30,000 into $270,000 in 5 years. But you may also be wiped out.
So say you buy a more reasonable house.
In the above cases, you make it thru without much pain (because it's easy to save up a couple years living expenses really quickly when your expenses are low).
Your winnings are not as great (in my case $20,000 would have been about $150,000 if I'd flipped it but instead I stayed and it's $350,000 but that might have been 600,000 to 700,000 if I'd flipped it.).
The case where you lose in both cases a major employer in the region leaves or ceases to exist- housing in the area becomes worthless- taxes remain high longer than you can stand- you go bankrupt and can't sell the house.
In both cases, if you make it- the winning case compared to renting is very nice. Over 90% of investors ACTUAL return is 2-3% over 10, 20, and 30 years (forbes magazine). Rent goes up as fast as inflation but housing payments don't. At the start of a 30 year mortgage you are paying as much for a 3/2 house as a 2/2 rental. At the end of a 30 year mortage, you are often paying under half as much as renters are paying. In retirement, you are paying a quarter what renters are paying (for comparable properties- so in the too much house case, you'd also be renting "too much apartment/luxury condo".
As you point out- everything changes.
Nothing is certain. It's all a percentage game. Real estate only has value when people want to live on it.
And to be honest, the limits to growth scenarios look to turn very, very nasty in 30 years. I'll be hoping I'm dead because a billion to two billion people could die and global wars over resources are likely.
For example- we are using more chromium every year than we did from 1901 to 2000. We are on track to use all of it- with recycling considered and that's whats estimated to be in the entire planet- not just known resources. And that's true for almost every industrial metal outside of iron. And no chromium will mean no more stainless steel. Maybe we'll figure out a replacement for it. But we'll have to find a replacement for so many things so quickly that disruption is more likely. In the mean time- we aren't doing ANYTHING to mitigate the problem. So the likely case is that it will hit hard when it hits.
Who knows-- maybe we can make new elements with fusion.
Anyway... I guess I'm painting a little more of a "buy guns and ammo and join a group" scenario than a "should I have a star bucks or save for the future" scenario. But if it happens, it's going to suck. And if it doesn't happen -well better to own a house than be renting.
I'm almost certainly dead by then (87 and my expected mortality is 78).