If i take 290K and compound it by 4% inflation/appreciation per year I get 400k after 8 years.
Non-income inflation means nothing for home prices. Infact non-income inflation hurts home prices because it drives down affordability.
Long term averages tie home appreciation to income growth. Income growth in the last 8 yrs has not been anywhere close to 4% compounded. Infact, it has been rather stagnant. In some segments income has been declining whereas inflation in other areas like oil, energy, insurance, healthcare are skyrocketing.
Just to give you an idea…4% compounding in income means that someone earning $75k/yr in 2000, for that exact same job and experience now in 2007 they should be getting $103,000/yr. More than likely that person is getting $80k/yr or so, if that!
