401k Withdrawal for a house?

Been watching this thread for a while and thought I'd chime in, even though I'm Canadian and our version of a 401K is called RRSP. Same idea, some rules are different, but the way it works is you put in your contributions, which become tax sheltered and grow tax sheltered. Contribute during you high income earning years and withdraw in your retirement, presumably at a lower tax rate.

My reality is that growth in my plan has pretty much flatlined over the last 15 years. Sure, you have the occasional 20% per year gainer, but that is offset by the high tech bubbles that burst, the market collapses, the money losing labour sponsered funds, etc. All this is watched over by your investment advisor who has a better house and a nicer car than you do. I also have considerable investment in my employer's stocks which have been up and down, but are pretty much valued at the same they were 5 years ago. My broker tells me I'm one of the lucky ones.

As to a house, they are an investment just like any other. The housing market tanked due to bad loan making policy, not because houses became any cheaper to build, thus it is a good time to buy housing. Bottom line, everyone needs somewhere to live and a house is an investment you can live in. Canada did not experience the housing crisis to the extent that the US did, but while my investments have flatlined over the last 15 years, house prices have tripled.

There are some good strategies regarding tax planning and I've always been envious of the American policy of allowing your interest payments to be tax deductible. Not the same in Kanuckistan. Buy the house and good luck.