The best way to explain the real estate bubble and the resulting price deflation is to look at the graph below. The average rate of appreciation from 1980 to 2000 was about 5% a year. From 2000 to 2006 the average appreciation rate was 14.83% each year. Most economists believe that current housing prices on Long Island are comparable to prices in 2004. Even with the decline in housing prices, over the long term real estate has appreciated significantly.