OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
A couple of things: First, I don't think the OP is skeptical that money can be made in real estate, so this line of argument is not too relevant.Yes, but the # of homes you reference as a % of the total is a stupidly small fraction, a number of them (if not most) still actually did increase in nominal value over 20 years believe it or not (obviously slower than the rest of the country, and most of them have cap rates at or over 10%, meaning you made 200% in income over 20 years from rents, more than covering the cost of the property in that time just from rents even if the property declined. Very different than a 2% cap rate property in SF that is nearly entirely reliant on appreciation. ...
Second, I think a form of the Efficient Market Hypothesis applies here. Real estate is relatively easy to leverage, has a pretty good value growth track record, and in the big picture is not high risk, but it has serious negatives too. For example poor liquidity, high transaction costs, vulnerability to economic and regulatory problems, etc. But the biggest (speaking as a 25 year landlord) is the management hassle. These factors combine to get you prices with fairly attractive cap rates. That's what it takes to attract buyers. IOW I don't think there is any magic here; RE prices reflect all the negatives and all the positives, with netting out to the market demanding a pretty good rate of return due to the negatives. For the OP, I would suggest that enduring the negatives is not worth gaining the opportunity to make money that he does not need.