The other day I posted about How fast do homes appreciate historically? At that time I had only found census data back to 1963 and some spotty data for previous decades. I calculated annual home appreciation at 5.9% for 1963-2008 and figured that dating back to the 1920's that homes have historically appreciated around 5% annually.
Since then I've found another source of data going back to the 1890's. The site Irrational Exuberance from Robert J Shiller has a Excel file with the data set for home values that he discusses in the 2nd edition of his book, Irrational Exuberance. That data shows pretty low appreciation in home prices in the 1890 to 1920 period which drags the overall historical averages down.
Examining the data on the Irrational Exuberance site, I find home appreciation for specific historical periods was as follows :
|1890 to 2007||3.44%|
|1900 to 2007||4.22%|
|1920 to 2007||4.03%|
|1948 to 2007||4.87%|
Or roughly splitting up before WWII and after:
|1890 to 1939||0.75%|
|1940 to 2007||5.45%|
Or the past 100 years, 1907 to 2007 : 3.78%
If you break it down into decade chunks we get:
Note that these numbers are all the nominal figures and do not account for inflation adjustment.
So what does all this new data tell me? First it seems the long term historical home price appreciation is 3-4% range rather than 5%. Personally I think that the data from 1890 to 1910 is much less relevant to today. At that period in time we were still transitioning away from an agrarian society and the world was a much different place. I think the past 100 years is a much more realistic measure of history if we're going to use it as a basis for what may happen in the future.
Given this new historical data, I'm going to use a rough figure of 4% for historical home price appreciation. Since appreciation in recent history post WWII has been a higher 5.45% I think that a 4% figure is a decent conservative value.