Home Price Trends

Rory Devaney: These houses are fantastic.
Tom O'Meara: They're pretty old, around 1900.
Rory Devaney: Our new ones are older than that.
--The Devil's Own

Interesting analysis on home price appreciation. From 1891 thru 1996, US home prices only exceeded inflation by 15% on a cumulative, not annual, basis.

In fact, for the 50 year period stretching from 1890 thru 1940, home prices had trouble keeping up with inflation.

That thinking changed, of course, during early 2000s run-up in home prices when it seemed that home values only went higher. Housing became an 'investment' and then a 'speculation.'

Then the bubble popped.

While some home markets once again have that frothy feel, long term data suggest that, from an investment standpoint, home purchases are, at best, an inflation hedge. And likely worse once borrowing and maintenance costs are factored in.