The point in real estate is to get out of the conventional thinking. Go Kiyosaki: you rent until you can pay cash.
Houses do appreciate, but they aren't an asset to you until they are paid off. Ferrari's appreciate and you can sell them easily. Detroit and Japanese cars depreciate from the moment you drive them off the lot.
You invest in things that will appreciate and pay for themselves. You want to INVEST in things that give you a postive return on your investment - Robert G. Allen says at least 10% annually. That's why they are investments.
Houses don't give a postive cash flow if you are living in them as the sole occupant. Rent them out and they make you money. Put a business in a wing of it and take a tax deduction on that section. (Or have the business own it and pay the business rental - unless you have to live on site as part of that business...)
But don't buy the conventional wisdom. If you rent, it's someone else's headache if the hot water isn't or the roof leaks. You aren't going to have anything to show for a house until it's paid off, which is somewhere between retirement and death.
Build your investments, cover your rent as a business expense. When your investments are sufficient, buy your house with cash and save all sorts of money for yourself. (Current mortgages make you pay twice what the house is originally worth. Unless you have a positive cash flow covering that, you are basically losing money for 30 years - and the only way to get it back is to sell it or re-mortgage it...)
That's the long and short of real estate. Rent, don't buy - until you can do it in cash.
Seth's Blog: "All real estate brokers working today have thrived in an environment in which the price of a house increased on a regular basis for fifty years. Fifty years. Of course, it's not just home sellers, it's us, too. Consumers have built their financial lives around this shared belief. I've spent the last few years fretting about what just happened: Your home as a piggy bank? Not anymore. The shared belief about real estate might be in danger. The facts changed this month for the first time. The question that those that market real estate have to answer is this: will people treat a bounce in real estate the way that they think about a drop in the stock market (a chance to profit) or will it lead to a long-term reevaluation of what it means to own a house? It's interesting to note that insurance on a Ferrari isn't as expensive as you think. That's because fixing a million dollar Ferrari doesn't cost nearly a million dollars. It's the serial number that you're buying--the right to sell that car later for a profit."