Home Prices to Rise Average of 5 Percent Annually (If We're Lucky)


Home prices are likely to rise. Maybe not today, maybe not tomorrow, but soon and, on average, for the rest of our lives, according to one reading of a common sense report from the Citizens Housing Planning Council (CHPC).

Is this news? For a lot of people, the answer is yes.

The report reminds us of an old rule of thumb in real estate, one that seems to have been forgotten in the real estate boom -- and the bust that followed.

For several decades, between the end of World War II and the start of the most recent housing boom, home prices increased slightly faster than inflation, at an average rate of about 5 percent a year. So by historic standards, it's acceptable to call 5 percent a "normal" rate of home price appreciation, according to the economists at Freddie Mac.

Home prices grew much faster during the housing bubble and collapsed during the housing crash. But once the boom and crash are finally behind us, it's possible to imagine prices returning to their "normal" range.