Frankly, we do not believe that anyone can predict the direction of the real estate market in the short term so appreciation factors very little into our buying decisions. Over the long term, home prices usually go up at least with inflation, and after considering mortgage leverage, this provides a nice capital gain. But this should just be considered icing. The actual cake is a stable rental coupon from 7-9% and mortgage amortization/paydown of another 4-5% annually on the equity invested in each home.
However, we still use common sense and only buy in popular and/or stable neighborhoods. We do not want to buy in areas that are on a down trend due to crime, not enough owner/occupied homes and other similar qualitative metrics.