Appreciation and Inflation

In recent years appreciation in the value of real estate has overtaken the annual rate of inflation and is the single largest indicator of inflation. Appreciation is the increase in market value if real estate. Inflation is the increase in the general price level of goods and services, or as a decrease in the purchasing power of the dollar. As the value of the dollar has decreased, passbook savings accounts and other forms of financial savings have lost their appeal as a whole as reliable to to save and invest for the future. Real estate has become a major menas by which people save money. This particularly holds true more so here in California where property has historically appreciated at such an alarmingly fast rate. California homeowners commonly refer to their investment whether it be their primary residence, second home or investment property as "money in the bank" 

Personally i can attest to this. I bought my first home in 1999 for $155,000.00 and i refinanced it October of 2005, it appraised for $615,000.00. As over-populated as California is people still want to live in California. Besides the horrific traffic and smog its a wonderful place to live :)