Your advice is mostly sound, but buying in a bubble can have severe and very real ramifications on you, even if you can afford the monthly payment. You may not be able to move without writing the bank a large check, and many won’t have the cash on hand
Of course there is non-negligible friction if you need to move, so you do want to be mindful of not buying right at the peak, but in general I think you're overstating how much you need to worry about prices: you don't profit when prices go up, since you'd also have to pay more for a new place, and as long as you can afford the payments, your home moves in line with the market and don't need to sell, you also don't need to let falling prices affect your sleep. Your position is market neutral, you are mostly giving up flexibility.
I agree, of course you don't want to have bought right before a dip. But if you sketch out a few scenarios and look at the overall and your individual situation (eg, Would rental income cover credit payments, even in an adverse scenario? Do you have expenses you could claim in years when you're renting out? Do you have other uses for the property, eg within a family?), you might find that you can manage the risk (or not). It's definitely not risk-free, but there's also significant upside potential if you can make a long-term commitment.
Do you actually mean after the bubble has burst? Because during the bubble, why would your house price be a fraction of what you owe on it?
In those states first mortgages are "non-recourse" loans. What that means is that if the borrower does not pay off the loan the lender's remedy is limited to whatever they can get foreclosing and then selling the house.
With a non-recourse loan if I find myself owing a lot more on my mortgage than my house is worth I've got the option of just walking away and letting the lender foreclose. I will no longer have a house after that, but my possessions and savings and investments and income will be safe.
In the other states first mortgages might be "recourse" loans. With those if selling the house isn't enough to pay off the loan they can come after you personally for the difference.
With a recourse loan the lender can come after me for the shortfall if the foreclosure sale isn't enough to pay off the loan. They might go after my possessions, saving, investments, and income.
It'd only be a tiny percent of people who found themselves underwater, but with so little equity they didn't care to lose it, and who also didn't care about tanking their credit score for the next decade.
You need housing, but you can get that without home ownership.
[0] https://www.macrobusiness.com.au/2022/05/australias-rental-c...
All of Florida, Vegas, Phoenix among others.
Some markets were down 60% peak to trough (Florida). The ones that rose the most also tended to be the ones that fell the most
