The Future of the Housing Market in California

This last year we experienced a little mini-boom in housing.   Is this a real recovery?  Does that mean the long term outlook for housing as an investment is good?

Saw a statistic earlier this year about who was buying houses.  The long term average was 82% were homeowners planning to occupy the homes, 18% investors looking for income.   The current average is 69% homeowners planning to occupy the homes and 31% are investors looking for income.  

The Capital Gains law was changed in 1996 to make speculation in the housing market by investors more lucrative and it appears to me it has introduced a permanent element of boom or bust in the housing market, and priced many people out of the market.  We are following a path similar to 1920 to 1954.  In 1920 Congress cut capital gains taxes on houses.  The market boomed for a decade then collapsed and was unstable for two decades.  Only after Congress changed the law to make it more beneficial to own a house to live in than to speculate in housing did the stable market we enjoyed for decades become a feature.