Quote:
Originally Posted by Dan02
Ideally we should be aiming for the increase in the average home value to be matching inflation. We shouldn't be looking for stock market like gains in housing values.
Each successive generation should have the same opportunity to own their own home as the previous one.
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And over time, that is generally what happens - all else equal (ignoring the scarcity issue)
However, all else has not been equal. If interest rates (and thus, mtge rates) stayed roughly constant over time, home prices would likely rise at a rate close to inflation. But interest rates have been declining for 40 years. And lower rates make housing more affordable, allowing prices to rise faster.
And the scarcity issue is another factor, in large cities. In a growing metropolitan area, location matters, and prices will rise due to the increased demand to be close to central areas. Location and scarcity will affect prices beyond normal inflation rates.