"I Have Too Much Equity in My House"....really? I didn't know that was possible

I was at a brunch last weekend in a very high end part of town. I was speaking with one of the other guests and when he found out I was a real estate agent, he told me "I have too much equity in my house." I looked at him kind of puzzeled because I thought that was the goal in today's market. He explained that if he didn't have so much money tied up in his expensive primary residence he would not have to work as much and he would also have money to invest in today's real estate market where prices and terms are very attractive.

It got me thinking about lots of different things--like

1.) We never know if the owner of the dream home that we admire is actually a financial prisoner of his house;

2.) I personally aspire to have a home that is paid for. But at what point does someone have so much money tied up in a primary residence that it's "too much" of their equity or net worth?

3.) Is the fact that people have equity in their homes that they are unable to tap into (as in years past) preventing a lot of "would be" investors from getting into the market?

4.) This gentleman (and I am sure there are many like him) is a prospective seller. He wants to sell his house to unlock his equity.

Your thoughts????