The latest final home prices data, reported for October, show a dramatic 18% drop. Indeed, this is a record drop for home prices, bringing them down to 2004 levels.

Current home prices data, and the current situation with the mortgage market and the housing market should make it rather clear that real estate doesn't always appreciate. Indeed, it is fairly evident that the housing market runs in cycles.

Real estate does, in general, go up over time, but one cannot expect quick appreciation to last forever. This was one of the (many) mistakes made in the run-up to the current financial crisis. Too many people, from mortgage lenders to borrowers, assumed that real estate would always go up in price, and figured that appreciating home values and prices would cover the costs of outrageous home mortgage loans.