Source: P215, ETF for Dummies, 2nd Ed (2011) by Russell Wild:
Your residence, your portfolio If you bought your home for, say, $130,000 some 26 years ago, and that home is now worth $1.3 million, I say “Congratulations!” (Yeah, even though it may have been worth $1.8 million in 2005.) But don’t let that bounty affect your portfolio decisions very much. After all, you’ll always need a place to live. Sell the house today, and you’ll presumably need to buy another (made of a similarly overpriced bundle of tiles and plywood).
Of course, someday you may downsize, and at that time you will be able to allot part of the value of your home to your portfolio. For that reason, and that reason alone, you may want to consider that the value of domestic real estate and the value of commercial real estate, while two different animals, are related. If your home represents a big chunk of your net worth, and especially if you are approaching a stage in life when you may consider downsizing, you may want to invest less in REITs than would, say, a renter of similar means. Or you may forget about U.S. REITs altogether.
Would someone please explain and enlarge on the last paragraph?
Why would one "want to invest less in REITs than would, say, a renter of similar means [or] ... forget about U.S. REITs altogether"?