I am skeptical of the claim that real estate generally appreciates over time, at least in real terms (inflation-adjusted). Yes that has been the trend for a long time and especially in popular areas, but there is no reason to think the trend will continue.
Current residential home prices in the US are far above their 100 year inflation adjusted trend. A few standard deviations above IIRC, and far above where they were in real terms at peak of the 2000s housing bubble. That's not adjusted for interest rates though, which explains some of the deviation.
So homes have appreciated strongly in real terms in the last decade, but it's likely they will revert to the mean from here (whether it be quick or more drawn out).
However you're correct that historically homes mostly follow inflation, and aren't appreciating in real terms. It's only in the modern era where that trend has changed, probably due to more investor involvement and Fed trying to stimulate growth aggressively.
But it's important to note, even if a home appreciates only at the rate of inflation, usually the buyer only puts 20% down, so from their perspective they are earning 5x the rate of inflation in equity.
Pretty lucky to those that lived in 10% interest rate times that were able to buy all sorts of property cheap and refinance at low rates later.
Its important to realise that homes now != homes of the past.
Modern homes are typically an improved product, better features, and also better environmental facilities. Thus they should be increasing beyond inflation.
The problem is that people need houses to live in now. I can’t suddenly not need a house to live in simply because I feel very strongly that the trend of real estate appreciation won’t continue forever.
