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Houses Out Perform Stock
With stocks continuing to fall, homeowners are finding their homes to be a better investment. The National Association of Realtors reports a 5.5-percent jump in the national median sale price from last year to $146,600, while the Standard & Poor's 500-stock index has fallen 13.0 percent.
Though NAR economist Lawrence Yun says it is unusual for home values to continue to rise during a recession, this is the second year in a row that homes have appreciated faster than S&P's measure of stock performance. About three-quarters of homeowners have more wealth in home equity than in the stock market, according to NAR.
Experts predict about one-fifth of all outstanding mortgage debt was refinanced in the year's refinancing boom, sparked by higher home values and record low interest rates. Home equity cash-outs totaled around $75 billion, helping to soften the recession and spur consumer spending. Home values surpassed all the measures of stock market performance – not just the S&P 500 – experts believe 2002 will see appreciation rates closer to the rate of inflation.
"Home Is Where the Wealth Is as Stocks Sink," USA Today (12/27/01) P. 3B; Fogarty, Thomas A.
Abstracts Copyright © 2001; Information Inc., Bethesda, Md.
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