As Rich’s investment site notes (in “US Not Going Down Japan’s Road” on the right hand column at the top), it’s not likely we’re in for a Japanese scenario. This will be a different kettle of fish here – the Japanese chose not to inflate their way out of their mess. We, on the other hand, are clearly choosing to inflate our way out of ours.
Regardless, over the long run (>40 year timeframe), housing has appreciated at no more that the rate of wage inflation (historically, about 3.5% per year averaged over the long term). 5% is indeed optimistic, but possible as we’re probably headed for a period of serious inflation, which will eventually (although not at the start, when inflation will primarily strike commodities, thus increasing cost of living) have the likely effect of inflating wages as well.
