Houses are a consumer good.  People don’t see a house as being a consumable item, but it is.  It may be a necessity, but the reason most people buy a house is because they need a place for shelter.  It was during the housing boom that people really started viewing houses as investments, although that mentality did exist before then.

Houses are not quite like cars.  Cars die on us eventually and it is usually in less than 20 years.  Houses last much longer, but even most houses eventually die unless they are completely renovated.

The only reason that houses go up in value (not counting the last 4 years) is because of inflation.  It is because the money we use is a fiat currency and the central bank has a habit of inflating the money supply.  This is really the only reason that housing prices go up over time.  In a world of sound money, house prices would probably gently fall over a long period of time.  This is not a bad thing.  Houses would be more affordable.  You could still invest in houses as a business, but your profit would not come from capital gains (housing prices going up).  Your profit would come from the cash flow, if well managed.

There is a lot of discussion on what housing will do next.  Is the bottom here?  Will prices drop another 20% before recovering?  While these discussions are relevant, you should really buy a house because it is something that makes sense for you.  You need a place to live in.  Buying a big, fancy house isn’t a good investment, but it might be what you need and what you can afford.  You should buy based on your own circumstances and what you need.

It does baffle my mind that a bank will lend you money for 30 years at a rate around 4 to 4.5% these days.  While I don’t like inflation, it is probably inevitable.  If you take out a 30 year fixed-rate mortgage today that you can afford, your last payment 30 years from now will probably be the cost of a nice lunch.