5% is the most commonly accepted annual rate of return.

1998 was flat as compared to the bottom of 94-95.

2003 was the “normal peak” when toxic financing extended it artificially, creating the bubble. Had 2003 been allowed to be the natural cycle peak, prices would have remained flat until about now and they would begin a slow rise about now.

4 years up, 4 down (actually 0% rise but vs inflation considered down) and 4 flat (staying with inflation), that is the “normal cycle.”

We had 4 up and then 4 really up, now we get 4 really down and who knows what beyond that.

2003 prices in 2009 would be “normal” range. T return to 1998 prices would be ten years of not keeping with inflation from a spot at the end of 4 years of no appreciation. It would be great for a buyer, it is entirely possible but it is not a sound way of using history to predict the future.

Of course nothing like this bubble has ever happened in R/E, so any guess is a good one, it just doesn’t fit into any models.