There have, of course, been some periods where values decreased, but the overall trend has been nothing but up. Like anything else, the value of real estate is determined by supply and demand. One of the main reasons is that shelter is a basic human need. People need places to live, work, and shop where they aren t exposed to the weather. In periods of high inflation, real estate values go up.
Real estate is an investment that benefits from inflation .
Do not confuse this with the rule for personal residences. While you can only deduct interest on up to 2 personal residences, you can write off unlimited investment interest. Of course we all know that the property will probably be worth much, much more in 27.5 years than it is now -not less. While there is some management and record keeping required, it is nothing compared with some other investments. If you invested in a business such as a dry cleaners or a restaurant, you would be married to the place, putting in God knows how many hours.