This thread is interesting... I must admit I am surprised at how many examples have turned up of long term significantly greater than inflation appreciation rates.
Over say 100 years you can't have certain areas continue to grow at much greater rates than other areas. Just to run some numbers, lets start with some average home values from
CNN/Money: The hottest zip codes
For the purposes of this example I'll assume 3.5% inflation for the next 100 years.
A San Francisco, CA home now costs $1,300,000. At 11% compounded it will be worth
1.8 billion in today's dollars in 100 years.
A Huntsville, AL home now costs $194k. At 4% compounded it will be worth
$319k in today's dollars in 100 years.
Basically any home that grows at 10% or more for 100 years will only be affordable to billionaires (today's dollars). When you start thinking about 200 years then you have to be at least a trillionaire (today's dollars) to afford any home that grows that much. Yes, the upper class is growing, and that is driving some home appreciation, but I personally can't imagine very many trillionaires living in 200 year old unremarkable 2,200 square foot homes.
Perhaps though we don't need to worry about such a long term since none of us is going to live that long. The home market is indeed very slow to react. And most importantly the average person only lives in a home for 7 or so years. So maybe over 7 or even 40 years those kind of appreciation rates can and will be sustained. I wouldn't bet on it, but this thread has helped me to see it's possible.