According to Yale economist, Robert Shiller (co-creater of the Case-Shiller home price indices), residential housing prices in the U.S. increased by 0.4% beyond the CPI from 1890-1990.

Factoring in the housing bubble and bust of the last twenty years doesn't change the average much but it does illustrate the great volatility involved.

Most of the people who have gotten wildly rich in residential real estate have done it in one or both of two ways:  They've gotten lucky by being in the "right place at the right time," or they've taken on great risk by using leverage (borrowing other people's money).

Does that mean you can't make money in residential real estate?  No.  But it's the cash flows that usually determine the profitability of such an investment, not the price appreciation.

And what about owning your own home?  Owning a home does have a tremendous benefit, but it's not the future price appreciation (0.4% beyond inflation hardly makes up for the costs involved in being a homeowner).  Nor is it the tax advantage (only one of the ways our screwed-up tax code rewards excessive risk-taking).  The big advantage to owning your own home is the "implicit rent" that accrues.  If you were living somewhere else, you'd be paying rent each month at an ever-increasing rate, whereas by living in your own home, your payments (at least the principal & interest components of a fixed mortgage) never increase and ultimately end.  This, by the way, is true whether you have a big mortgage, small mortgage, or no mortgage.