You're missing his point (which wasn't hard since the point wasn't very clear...)
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.
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.