To be clear, I understand what inflation is, but something that’s only keeping up with inflation doesn’t make sense to me as an *investment.* I can understand increasing value by actively doing something, like fixing the roof or adding an addition, but not by it just sitting there.
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Home values are largely an index of how badly people want to live in a neighborhood. They don’t always increase, just ask people who bought houses in 2021, but generally speaking if you’re in a good neighborhood in a good city there’s always people looking to get there. The more people want to live there, the faster houses are snapped up when they come available, the more your house is valued. If interest in your neighborhood cools, houses will sit longer, owners have to reduce the price to sell, and your value drops.
So locally you can see dips and spikes, but nationwide, our population is increasing, and therefore demand for housing is increasing. Supply isn’t increasing fast enough, so prices increase to make up the difference.
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