Using a generic inflation calculator online shows a value of $437,000 (approximately for this home).

Inflation calculators use the government published GDP deflator figures. Remember, these are the same figures that they use to justify keeping interest rates depressed below what they really should be. If you believe the reported GDP deflator, you might as well believe in Santa Claus and the Tooth Fairy. Real inflation is much, much higher and since the fed quit publishing M3 is probably running at 10%/year or more. Things are getting extremely expensive now and it’s going to get worse.

Home prices will continue to decline in nominal dollars, however IMO they will not get anywhere close to 2000 nominal values. They will drop below 2000 real values back to 1995 real values or less. However, that condo still might cost you $550K in nominal dollars.

For this to happen, salaries of course will have to rise. I think this will start happening in many industries during 2008 and 2009, especially medical, homeland security, military, all of the stuff that’s subsidized by the government, pharma, or insurance industries. I expect the government Keynesian policies to just get more extreme as that’s the only lever they know how to pull. Just spend, spend, spend and print dollars faster and faster. Everyone will just be happy that they have a $150K/yr job in the Homeland Security department looking through people’s email — or a $200K/yr job with a private security contractor, patrolling main street to keep the poor people from rioting — or a $200K/yr job with a big insurance company trying to find ways to deny Aunt Millie’s claims for chemotherapy. We are completing the transition into a full socialist corporatocracy that has been going on for a long time.

Do I want this to happen? Of course not. However, it’s what I expect.