The Real Estate Looking Glass How True is it? 

Thanks to the Marx Brothers' Duck Soup for proving how easy it is to fool us into thinking we understand what we see, then encouraging us to laugh at ourselves and be open to other possibilities

Whether commercial or residential, real estate is a physical asset that fills needs. The more effectively it uses factors like location, design and condition, the higher its value. 

This use/value balance is easy to see with commercial properties, which are built for a particular use and collect lease rent, providing a traditional "rate of return". The rent charged reflects property quality and features.

Finding this balance is more complicated in the residential world. As its primary benefit, a residence provides living space where the owners feel "at home" - making it both a financial and qualitative decision. Owners expect additional benefit by building savings - some of this easily measured as equity grows with monthly payment, but recent markets have given hope of value appreciation. The median price of homes sold rose 55% from 2010 to 2020, according to the Census Bureau. About 16% of this can be attributed to CPI inflation. Another 15% to 20% can be attributed to an increase in the average size of homes sold. That leaves 20% to 25% in 10-year asset appreciation gain. Maybe - but as the SEC tells us, past performance is not indicative of future results.