Does Real Estate Appreciate?

[Clayton Sneider]

Michael Bluejay on his website http://michaelbluejay.com/house/appreciation.html

says that real estate does not appreciate faster than inflation. I think I mostly agree with his logic:

"When you think about it, it seems that long-term appreciation rates would have to be pretty close to the general rate of inflation. Because if appreciation were much higher than inflation, then it wouldn't be too long before no one could afford to buy a house! If workers make 3% more per year on average, but the price of homes goes up by 6% per year, then pretty soon homes become widely unaffordable."

This doesn't mean that you don't make money on the appreciation of real estate, especially if you borrow money to buy it. But, on average, don't expect appreciation to be more than inflation.

What do you think?

[Steve L.]

You ever read John Schaub's book... Building Wealth One House at a Time.  

He compares the 10-year price difference for houses he chose to buy in The Strand (I think Manhatten Beach area) to houses in Compton.  They are just 17 miles apart.