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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Don Lloyd who wrote (114184)7/24/2001 12:38:32 PM
From: rolatzi  Read Replies (1) of 436258
 
The difference is that the purpose of a stock investment is to achieve and realize capital gains. In
contrast, the normal purpose of a home investment is for its use value as shelter. In this sense, the
capital gain can only be realized by either death or homelessness, making it a pretty useless buffer.

That's not entirely correct. The available equity in homes will be used by many boomers upon retirement. They will move to smaller and less expensive locations. It will undoubtedly again be a question of the first ones out the door, as when the younger boomers retire, there will already be a glut of houses for sale. Closer to the present time, as the boomers parents pass on, the parents houses will provide needed money to help fund the boomer's retirement or to help cover their losses in the current bubble. In addition, many upper middle income people now have vacation homes that could be sold in case of need. Furthermore, the liberalization of the tax laws with regard to eliminating the capital gains tax on residences makes this strategy desirable. In fact, it encourages people with a vacation home to sell their primary residence, establish residence in the secondary house, keep it for five years before selling it without capital gains taxes.

rolatzi
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