If you add 6% a year to homes that were bought in 1998 @ 300k they
You cannot add 6% a yr, how did you arrive at the conclusion that it is the right amount of sustainable appreciation? Prices follow income fundamentals, and income has not risen very much at all since 2000. At least in my line of work (IT) companies are still offering hte same salaries they were offering in 2000.
Infact if inflation of essential commodities, oil, food, energy etc. is high then affordability will decline further.