Sacrificing home size means buying a house that does not meet your needs. Yes, that can help get into an area where economics are changing, but quality of life is a high price to pay for cash. Yes, commenting long distances can help get into an area of economic change, but quantity of life is the highest price to pay for cash. Using your home as an investment means you are at work 24x7. The joy of life is lost when your home is just another job.
I still don't get the correlation, since the company has the liability, not the individual top directors in the company, which was the point I thought you were making prior. Of course, the company is a money machine, and is a much better resource for compensation. I guess you were referring to a more typical type of domestic company?
I agree with what you say; however, location to me is the most important thing in quality of life and other factors are less important. However, I didn't mean that I was purchasing homes that did not satisfy a required size or utility, just that, I would opt for being "at miniumum" at that area to get the right location. I would often hear home seller ads making statements like "Be smart, get the most home for the money!", when the really "smart" thing would have been to buy the "most location" for the money and just get what you need as far as a home.
There is a lot of home buying in intrinsically "scarce" locations by investors in upswing cycles. When there is a strong downturn, they leave or try to leave such a market, which puts added pressure on prices; however, typically, if the decline isn't too severe, such homes typically change hands (consolidate) to primary or secondary residence owners that don't just see such homes as an investment. The scarcity characteristic helps offset the other adverse issues in the market, but may not entirely during consolidation.
I would say the latter definitely occurred in Park City, Utah. The Summit County resorts suffered some decline, but not like PC, which became a massive speculative bubble (a lot of California Investment) due to appreciation too fast over too short a time.
Naturally, what is great about a house is even if the "investment" doesn't pan-out or along the time line expected, if chosen well, is shelter and an awesome place to live (with privacy).