In steeply appreciating markets, those people didn't tie up a million dollars. Just five or so years ago, a million dollar house sold for $500,000 (in some markets).
A steeply appreciating market is either an indication of a bubble or that the previous valuation of assets was highly inaccurate. They're market inefficiencies that, sure, people will try and arbitrage, but they're not the norm... except that the housing market is really weird due to the incredible illiquidity and non-divisibility of assets.