I'm really surprised that no-one had touched the definition that "Rich dad poor dad"'s author, Robert Kyiosaki, gave in his book, that primary residence house is not an asset (read investment), but a liability. Assets put money in your pocket, a liability - takes money out of your pocket. So, unless you rent your house and get back not only all your mortgage payments (that includes taxes and insurance), but also cover your maintenance and vacancies, it cannot be called an investment. It's a liability.
I absolutely hate that quote, enough to almost wholly discount the book and him as an author because of it, despite there being some otherwise sound advice there. Why? Because it wholly ignores the value of utility derived (ie imputed foregone rent). What's his suggestion then? Set up a corp, buy a home, have the corp rent to yourself, forego tax free cap gains, pay higher rent than carrying costs(with after tax money) so that the corp makes a profit, lose out on tax advantages, and have to pay higher overall fees due to increased costs for accountants and taxes?
People are piss poor at even accounting for investments, let alone evaluating them. So many people simply look at price paid vs price sold of a home, and call that their return.
The true calculation is something along the lines of down payment + tax/insurance/(forever) + periodic, varying interest paid + periodic principle paid - deferred (tax free) rent - final selling price - "pride of ownership" value, all adjusted for the time value of money, for varying terms, at varying interest rates.
Damn near all of those things are either unknown, or best guesses, or unquantifiable (pride of ownership). This makes a true investment calculation a rough guess at best.
There are $5m homes in Vancouver now renting for less than 0.1%/month. If it were a stock it would have a negative P/E, a Price/Sales of over 100, and negative growth. It *only* makes sense as a speculative investment which was the case for the last 15 years, but quickly not being the case as we see double digit YoY declines in the high end of the market. The vast majority of people are morons with money, and aspire to (or already) own homes. Because of that you see far greater swings in fundamental valuation metrics in homes on both the bull and bear side of the cycle, albeit on a longer time line since people are stubborn and have it in their head that homes only ever go up. So often in these cases (another Buffet quote) people will readily ignore the obvious until their diaper is so full it's overflowing from the sides.
Contrast that with other places where even if the 1% rule isn't in force, you're at least in the grey in between area where even if renting may be a few dollars cheaper, you can rationalize it away from a security/pride of ownership perspective. My feeling of the 1% rule is that it's a buffet style "margin of safety". Those few properties that meet it are largely "can't lose" ones where even if a few big things go wrong, you can still get by. Contrast with Vancouver/Toronto where in terms of an ongoing investment, prices are at the point where everything has already gone wrong, and the only hope of salvation is continued appreciation well above inflation and income growth rates. Not impossible, but it's the investing equivalent of drawing to an inside straight flush.