Putting Stock in Real Estate: That Home May Be a Very Wise Investment

While much attention has been given to soaring stock prices the past few years, homeowners have done extremely well. According to The State of the Nation's Housing: 2000, a study produced by Harvard's Joint Center for Housing Studies, "the value of primary residences climbed 20.5% from $7.8 trillion in 1995 to $9.4 trillion in 1998, while the value of stocks owned by households nearly doubled from $3.8 trillion to $7.4 trillion."

The surge in home prices is great news for those of us who believe that real estate can be an attractive investment vehicle. But wait, as TV ads say, there's more: A good argument can be made that residential real estate investment gains are significantly higher.

Did real estate returns rival those of the stock market? During the past decade, the stock market has enjoyed enormous growth. But if we are to have something close to an apples-to-apples comparison, we cannot discount or ignore the shelter value of real estate or the way realty profits are treated. ...