Even though the housing prices in Meridian and around the country have taken a beating in the past two years, I am still greatful that I am more invested in real estate than in the stock market.

Here are a few things to remember about great reasons why homes can be better than stock:

• You can live in your home regardless of its current value but what do you do with 1,000 shares of stock?
• The average home in America appreciates 3.8% a year over the long term and this is typically on leveraged money!  In other words, if you bought a home with 3% down, and it goes up 3.8% you actually made 1.26 times your investment the first year even before tax savings! (Buy a home for $200,000 @ 3% down = an investment of $6,000; at the end of the year assuming the 3.8% long term return it would be worth $207,600).  I recognize you have to make monthly payments, but as long as it is in line with monthly rent these wash out.
• Even if the market depreciates over the long term and the property drops 50%, after your mortgage is paid off, you own the home instead of never owning your rental!  If your stock drops 50% you still have the same number of shares but you can't go retreive a piece of the company or their assets for your personal use.
• You can have a realistic opinion of the current value and market with your home, but how would you have been able to predict the demise of WAMU, World Savings, Dime, Bear Sterns, etc., etc., etc.
• You can get a room mate or renters to help with payments when need be.  If you turn your home into a rental, you actually get to depreciate it even though historically the home apprecaites (for once a good double standard from the IRS).

As I watch the stock market go wildly down, a little up, then down again today and watch companies like WAMU sell their assets then bankrupt I realize another benefit of owning your own home.  If you hit such hard times, you can at least claim the Homestead Exemption to protect the equity of your home from involuntary liens.  

If you make money on the appreciation of your home, it can be tax free money via IRS code section 1034 for your primary residence or defer the gain via section 1031 on investment property.   I don't know of a way to not pay immediate tax on gains from stocks.  

Jim Paulson, CRS, EPRO, GRI, EcoBroker - Owner/Broker Progressive Realty Corporation

www.Progressive-Realty.info