I've known a few people who own a second home as an investment in a high cost of living area. For them, it is just another way to invest that doesn't involve the stock market.

The returns can be a little lower, but you don't have to pay capital gains when you sell your primary residence. So, the no-tax financial move is to move into the rental when you want to downsize or leave and sell the primary residence. Then, you either live in your downsized and paid off rental as your residence or you wait two years and sell that residence as your new primary residence to get out of paying capital gains on your rental.