> But the biggest tell that housing is valuable is that nobody is spending $500k on housing to rent it out if they could make more money pumping $500k into the stock market.

Of course they are. I do. I do so knowing full well that my expected returns are going to be nowhere near my brokerage account invested in public equities. The past decade has followed that expectation.

I and many others do it as a form of diversification. It’s risk aversion in the end. Most people with capital don’t want to be putting all their eggs into one basket, so for wealth preservation and diversified income streams it’s a good option even knowing up front you are expected to lose money via opportunity cost.

That ignores other benefits of housing being a privileged investment category by the current government and monetary/tax policy. If you seek cheap leverage this is probably one of your few options as a “two bit” player in the market at that $500k level.