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Luxury vacations and cars can also be paid over a lengthy period of time, so it seemed appropriate.

If you actually do have a strong preference for the more expensive house, then I agree you should get it if it's not gonna be too hard to pay. But I got the sense that he was talking about cases when you can't really decide between one deal or the other.

In these cases, if you simply chose the cheapest because it's cheapest, rosy retrospection would kick in and you'd most likely have a good case of buyer's remorse. "Yes, this place is cheaper but the other one was so nice... surely I could have had afforded to pay 200 bucks a month for it..."

However, if you think of your decision to buy the cheaper one as an opportunity to also buy something else you'd really like, it becomes easier to counter this tendency. "Sure, the other house was nicer but with the money I saved I could afford an amazing redecoration in this one."