Sometimes people need to move for family or work reasons that are beyond their control. Being underwater on a home in a situation like that isn’t fun. I knew people who ran into that in 2008.

You can use your real estate as collateral if you own it. To buy nice cars, fancy vacations, etc etc. And you want the real estate value to increase as much as possible. Even if that means destroying your nation forever.

... people take out loans to buy cars and go on vacation, using their house as collateral?

Yes, the economy of the entire industrialized world runs on this.

People borrow money against their house to buy a car or a boat because rates are much better. The bank tells them to borrow a few ten thousands extra while they are at it, since the rate is so good. Why don't you take a vacation or get that new thing you wanted to buy?

From where do you think everybody has so much money to spend, while you are working full time and have nothing? It's not only credit cards...

I would personally advise against that, but HELCs are a popular financial vehicle in order to do exactly that.