Buying a rental in the market you sell your labor also carries very correlated risk-- if your labor market goes through a bad period for whatever reason, your rental income is likely to decrease at the same time your employment income will decline. Gentrification of "bad neighborhoods" might slow or stop, and marginal neighborhoods like the one you're thinking about buying in could go downhill. Or what if climate change makes your city or neighborhood suck 30 years out? At least in NYC, a lot of new development is in low-lying floodplains, and a lot of people probably just took a big hit in their property values when it became clear what even a Category 1 storm could do. Buying a pre-construction condo also means risking the condo being poorly built.
It's hard to know when property values are in an unsustainable bubble are not ahead of time. High property values in certain jurisdictions can be sustainable for a long period of time if there is a high population of high-income people and land use is restricted enough that housing units are distributed by rich people outbidding poor people for existing housing, so poor people are displaced to other places, rather than more housing being built. Cities with diversified economies are different from places like Phoenix, with housing demand being driven by construction employment building more houses, and utterly unsustainable loans, compared to loans being driven merely by pledging a huge proportion of a lifetime of wage labor.
