Wealth is only useful if it increases the net options of the wealth holder. In the case of housing wealth - if base level housing is expensive - then owning a home is less of a measure of wealth than it is a balwark against the cost of renting and a bet on the ongoing increase in the cost of housing.

If you sell your house the only option is to re-enter the housing market through a different, equally expensive, door. You can't repurpose the money for any other purpose.

The only time it becomes "wealth" is when parents die, leaving their children with a suddenly valuable asset.