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Housing wealth has more immediate impact on consumers spending than stock wealth and has sustained the U.S economy since the beginning of this decade, shows a new study commissioned by National Association of Realtors.

Regarding Speculations about prospects of a housing bubble "The fundamentals of a growing population, tight supply of homes available for sale and rising construction costs will support home prices moving forward.

Spending from housing wealth only takes about a year to reach 80 percent of its long-run effect, compared with nearly five years for stock wealth to have the same effect--likely because near-term gains in stock wealth could prove to be unsustainable.

Home owners are more confident of gains in housing wealth, so they spend more readily and quickly when they occur.

Other findings include :

• About 6 in 10 homeowners have more Equity than stock wealth.
• Housing wealth accounts for 36% of the nation's tangible assets.
• Late last year, the home ownership rate was 68%, but only 52% of household stocks--either directly or indirectly.
• The Federal Reserve Board's Survey of Consumer Finances showed that the top 1% of stock holders controlled 33.55 of stock, while top 1% of homeowners controlled 13% of home equity.
• Home owners accumulate significantly more wealth than renters.
• Analysis shows a renter in 1984 would have accumulated $42,000 in net wealth by 1999. However a typical owner household in 1984 would have accumulated $167,000 in the same time frame.
• Housing is an attractive investment because it directly builds wealth through both home price appreciation and forced savings in the form of mortgage payments that reduce principal. It is also appealing because it allows owners to tap into that wealth at favorable interest rates to finance other forms of investment and consumption.

Conclusion:
Real Estate is one of the best investments people can make.

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Sincerely,

Juhi Jain
NJ Real Estate Licensee