There's a general pattern to the general psychology of people. Essentially it goes like this: everyone will believe in some fact A, mostly because everyone else does; those who question A are at best ignored, at worst shunned. Then, something external happens that makes everyone requestion A - a conclusion is reached: A was clearly wrong, and we must no longer believe it at all; to do so would be naive! Thus we should believe some new fact B, which is usually just the converse of A.
Take, for example, the housing market. In this example, our fact A will be "real estate never falls in value". Up until a couple years ago, people truly believed this "fact", at least enough to build up retirement dreams and fantasies based on it. Then the housing bubble depression recession extravaganza happened, and now everyone clearly sees the folly of ever believing that housing prices couldn't fall. Unfortunately, just like most stupid people do, the masses are taking the wrong lesson away here.
Witness the NYTimes blog post today purporting to explain why your house's value probably won't rise. Wow, way to go, captain obvious. I understand you're posting to get the most eyeballs, and right now your target demographic of 30-60 year old liberals whose houses lost a lot of made-up value in the bubble is feeling nervous and upset, so you're feeding their anxiety by publishing posts like this. Or hell, maybe you're afraid yourself - I get it, its OK.
But let's be frank - your house's value will probably go up. It may not rise faster than inflation, but it will go up. Considering that inflation roughly halves the value of the US dollar every 12-16 years, assuming that your house doesn't lose real value proportional to others in the nation (not an unfair assumption, though I'll come back to it later), your house should double in value every decade and a half. Your house's value should clearly rise over time if only due to inflation. That's why you buy a house - and no housing bubble can change that fact.
Now, there are two caveats here. The first is that although your house is rising in value, you should only be expecting it to rise proportional to inflation - you won't be gaining any new buying power, but you also won't be losing any. Considering that by owning a home you also get to live there, this insurance against inflation is a very useful thing - however, its not an automatic road to riches like some people seem to believe. The second caveat that is much more pernicious - you should only expect your house's price to rise proportional to inflation if you made a good investment.
"What?!?" I hear you all screaming incredulously - you mean that investing in real estate and housing takes skill? Well duh. Now, like most investing, if you're just not dumb about it, then you can gain most of the benefits without being exposed to many of the risks. For instance, what's the easiest way to ensure your pick a house that will appreciate in value? Pick one you want to live in. Make sure there are good schools in the area. Make sure there are things to do. Make sure its close to places people work. Make sure it has easy access to transportation for short commutes. Try to get a nice view, and try to buy in a city or neighborhood that has lasting name-brand recognition (East Village in NYC, The Marina in SF, etc). Rental units near universities and colleges are great ideas. Make sure the unit has all the amenities you'd want in a place - after all, if it was good enough for you, chances are its good enough for someone else, too. As long as your house remains good enough for someone else, you won't lose money on it relative to other real estate investments.
Now obviously, you can lose money in real estate - its easy. Pick a location that has a very long commute (ex-urbs out west, anyone?). Pick an area that is completely dependent on one industry (ahem, Detroit). Get excited about rapidly rising housing prices in areas that can still field development (Miami, anyone?). And finally, a general downtrend in the market is going to artificially deflate your house's cost for the short term - this isn't because its worth less; its simply because demand for houses has gone down. Such occurrences may be scary, but they inevitably pass.
Investing in real estate is a lot like investing in the stock market - in the long run (decades) its almost certainly more profitable than anything else you can do, but sometimes in the short run (years) it won't quite pan out. There are things you can do to decrease your exposure to risk (keep a diverse stock portfolio, keep your debt low), but like any investment you will ultimately get out what you put into it. Now, the stock market has an easy, zero-effort way for people to ensure exposure to the long term benefits of the stock market - they're called Index Funds. But even with those, there's some risk involved - stocks may hit a slump for a number of years while your portfolio underperforms.
Anyway, my main issue with this NYTimes blog post is this: it substitutes one idiotic, black and white "truth" with another equally idiotic, black and white one. No, house prices will not always rise. Nor will they probably not rise at all. Both interpretations have the alluring attribute of being universal - they always apply. The animalistic human brain loves such universally applying rules; they're easy, and we're lazy. But just keep in mind: investing in real estate is investing, and when has anyone made money investing by being lazy?
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