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<< There have been enough times when the housing markets in the US have declined, sometimes dramatically, that a house is a fairly high risk investment. >>

Just curious if you could provide some source of information or link that supports this.

I don't know if one should think of a house as a "high risk" investment, but one can obtain a LOT of data on historical house prices in different areas here:

Of special interest to me is the spreadsheet showing house price indices by MSA. Here's a direct link to the most recent one, if you want to download it (it's an excel workbook):

To take one example that's been mentioned here, look at Houston in the 1980's. The Home price index (for all MSA's, 1st q of '87 is the baseline at 100.0) in Houston peaked at 129.27 in 2q of 1982, and bottomed at 92.55 in the 4th quarter of 1987. That's about a 28% drop overall, over a 5 year period.

Of course, this is just an index for an entire metro area. Certain neighborhoods within that city may fare far better or worse.

Anyway, the data is fascinating if you're interested in that sort of thing.

FWIW, the data goes back to 1975, and does seem to reflect a rule of thumb of long term housing prices increasing about 1% above the rate of inflation.

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