CHICAGO: There is a nagging question to consider before you jump into home-buying after one of the worst housing slumps in American history. Will you ever make money?
Based on how the market has performed in the past, there is no clear answer.
Not that there hasn't been good news about home prices lately. Prices have rebounded in most of the largest US cities over the last five months. The closely watched S&P Case-Shiller home-price index rose 0.9 percent in July on a seasonally adjusted basis.
Low interest rates provide an added bonus: With mortgage rates still at generational lows — 30-year loans still average well under 4 percent — it's a good time to lock in a bargain.
Residential housing is still a buyer's market, and it will be for some time. There was an inventory of 2.4 million unsold homes as of July, according to the National Association of Realtors. That is roughly a 6-month supply, based on current sales trends.
But such statistics don't provide a basis for determining whether buying a home will be a money-making proposition.
Housing prices have a history of following demographic trends. When veterans came back from World War Two, for example, they wanted homes that would accommodate their growing families.
When their children — the Baby Boomers — became home buyers, they fueled the market from the late 1970s through 2006.
Historically, the two greatest surges in home prices over the past century occurred between the end of World War Two and the mid-1950s and from 1999 to 2006. When there are large numbers of home buyers of child-bearing age, that seems to correlate highly with home sales.
The last run-up in prices was the largest, according to data collected by Yale Professor Robert Shiller, author of “Irrational Exuberance” and co-creator of the Case-Shiller housing indexes. A rush to real estate combined with Baby Boomer liquidity, distrust of the stock market and a bubble mentality to drove that mania.
Homeowners got smaller price bumps during the inflationary late 1970s up until 1980, and increases remained moderate until 2000, when home prices went on a bubble-fueled tear, according to Shiller's historical data.
Is history any guide to the future performance of housing?
In one respect, yes. If the Millennial generation, born after 1980, jumps into the market en masse as their parents did, then they will bid up prices. However, that assumes they can afford to buy homes. High unemployment and wage levels that have not been keeping pace with inflation for the past decade suggest that many would-be home buyers will remain renters.
The idea that home prices will always track the rate of inflation is not always true when it comes to specific neighborhoods or regions. It is a myth that home prices consistently rise.
I took a look at my own home in the suburbs of Chicago, which we had built in 1999. If it had kept pace with inflation, it would be worth $433,000 today. For this rough calculation, I used the US Bureau of Labor Statistics Consumer Price Index inflation calculator.
After I ran the CPI calculator estimate, I discovered that my home is probably worth — based on current market value — at least $183,000 less than what 14 years of consumer price inflation would have dictated.
The housing meltdown and subsequent foreclosures have depressed housing prices by up to 50 percent in some areas.
Places like Stockton, California, which recently filed for bankruptcy, have been devastated. Atlanta is also still reeling.
Florida, Arizona, Nevada and parts of California are still feeling the effects of the housing crash.
What does this mean if you want to jump back into the housing market? You may get a bargain, but don't expect to see the appreciation the country has experienced in the past.
Housing is not like the stock market in that it could take many years, or even decades, to bounce back.
Keep in mind that this housing recession is unpredictable because it is unusual for its duration and intensity. Two national housing downturns in the 1990s (1990-91 and 1994-95) were accompanied by relatively small recessions and recoveries within a year or so.
Since the US is linked to a global economy teaming with uncertainty and a banking system that still hasn't resolved its pre-2008 issues, homes are worthwhile shelters, but they still may be dubious investments.

— John Wasik is a Reuters columnist and the opinions expressed are his own.