To some extent, yes. It's fairly illiquid, and unless you're willing to be homeless, move from the city to a rural area, or take a serious cut in living style, you're likely going to need to buy a replacement at similar cost.

It's certainly not the same thing as having that wealth in the bank, or as stocks.

It does help with loans.

If I take a $100k loan, my wealth doesn't go up $100k.

To the OP's question, the value in a home is not an illusion if you can do things like borrow against it.

Sort of. In the same way that selling 2% of your company for $10M gives your company a valuation of $500M. We don’t know what the other 98% of shares would really sell for.

In a given year, just over 1% of a typical city’s homes are transacted. Over a decade, about 10-15% are transacted.

It's an illusion because it is based on the presence of infrastructure, other people and their work. If those people weren't there your house wouldn't be worth as much. You can build the same house in the middle of nowhere and it would be worthless.

That doesn't make it an illusion. Yes if they circumstances are different the house will have a different value.

maybe not a full 'illusion', but it's just not liquid. when using 'net worth' calculators, I severely underestimate the value of my home - between delays, fees in selling, and the cost of moving someplace else, there's probably 10-15% gone from whatever paper 'wealth' the raw number is. It doesn't really help me in any meaningful way with respect to planning. Most of my stocks are liquid. There's a potentially similar hit re: taxes, but... I can buy and sell $1000 of stocks tomorrow, I can't buy/sell $1000 of 'house' tomorrow (REITs notwithstanding).

Right up until you downsize, move to a cheaper area, or pass the value along to the next generation (you die).