Are Real Estate valuations rising or the value of dollars declining?

[AJ Wong]

In 2018 the average US home price was $248k 

In Dec 2023 the average US home price was $382,600.

An increase of roughly 50% in 5 years. 

$100 in 2018 buys about $80 worth of goods in today's purchasing power. 

A decrease of roughly 20%+ in 5 years. 

The Pandemic housing market, fueled by historically low interest rates, began in the Spring/Summer of 2020 and arguably ended in late 2022 or Spring of 2023 with rising interest rates. 

If $1M today equals $800k+/- in 2018, have home prices appreciated or valuations increased because it takes more dollars to buy less? 

Most likely some combination of both. 

Some of the principal protections of real estate include:

Limited Supply

Leverage

Rental Income

Tangible Improvements

Diversification

Property Appreciation 

Tangible Asset 

Hedge against currency devaluation

Demand Factors

During inflationary periods, real estate investments have historically shown an average annual appreciation of 5-6%. During periods of high inflation some studies show average real estate investment returns as high as 9.5%

This is supported by recent and current inflationary conditions. 

What do you think?