The Volokh conspiracy has a nice piece on housing markets, including the example of Phoenix, which currently allegedly has a huge surplus of houses, but prices haven't significantly fallen. Housing prices can drop, I suppose. But typical and historically they increase. I think if one did a long view analysis that would be true, but it may decrease for a few years. In Houston, the real estate market crashed in the 90s and up until 2000. At that time I got my condo for a very low price. Since 2000, its doubled in price. That would be very nice if the price was high, but of course it wasn't. Anyway we'll make some money off it. Not much, taken into account improvements and taxes, but enough. In an urban setting, where land is scarce, i would imagine prices would always increase. They are selling new condo units a mile away from 400k. It's a block away from the medical center (location, location, location). Would have been nice to have that property two decades ago! (When the med center was very small). Anyway a house is a home, not an investment. But its nice to at least get your money out of it. (unlike cars, for ex).