No doubt, this neighbor should have changed his password long ago, but there is a lot to admire about his security hygiene nonetheless. I think it's taken too much for granted that one should change passwords on a regular basis. If we assume that changing passwords more frequently means that we are more likely to use more rememberable - and, thus, more guessable - passwords, then perhaps this is not a fluke. Perhaps…
One should change passwords on an irregular basis (a regular basis is weaker protection than an irregular basis). This is just an additional layer of security, not a perfection. If the password has ever been compromised, a password change policy removes the key from bad hands. Discovered passwords are not always immediately used; in many situations, they are stored for later use, perhaps even sold/traded.
So, if it is true that when people regularly change their passwords, they pick poorer passwords, then perhaps those poor passwords are a larger risk than the risk of maintaining a compromised password. Again, this is not a question of what is the most rational policy. It is a question of human behavior, which means in order to find an answer, we need to study what people actually do.
I googled to see if I could find studies on this, and I did: "The True Cost of Unusable Password Policies: Password Use in the Wild" by Philip Inglesant & M. Angela Sasse: http://www.cl.cam.ac.uk/~rja14/shb10/angela2.pdf I have yet to read it in full, but they do touch on this idea at least some.