Inflation does account for some increase sometimes, but not always. I certainly do not expect homes to go back to say, 1960s home prices. My parents bought their small home in 1963 for $19,000 and in Southern California, that is not going to happen again. (There are parts of the country where that is true though.)
Homes can most definitely depreciate though. Using a generic inflation calculator online shows a value of $437,000 (approximately for this home).
I am just wondering, when the basic fundamentals for housing actually start applying in Southern California, what will homes be worth? I know, I know, whatever someone is willing to pay, but it used to be the banks were pretty picky about who they loaned to, the underlying value of the property, blah,blah. You know,the old fashioned crap that went out of style when the smart people started running things.
