I think that's his point; that 5% returns aren't actually that great.
Home loans at least in the United States taken out at usually 5x leverage which would never fly for index funds but is ok for some reason for buying a home, even though you could become unable to pay the mortgage in which case the bank has to spend money foreclosing and selling it.
I tend to think it's not worth it to try to hedge against that unless know you're going to need hard cash for a specific purpose during a recession, like meeting payroll in your own company.
My ide of diversifying is to hedge against industry-specific risks like space launches if Kessler syndrom hits, internal combustion tech if the ICE car ban becomes reality, real estate if the Detroit scenario happens, etc.