nPlease check out this week’s cover story in BusinessWeek and let me know whether you agree or disagree with it.

nn

I just finished it yesterday, but there are already a few thoughts I would like to add. They should give some comfort to the real estate agents and home sellers who will undoubtedly hate this story.

nn

1. Houses offer a dividend that no stock will ever have: a roof over your head. So if you’re comparing the investment returns of stocks and housing, you can’t just look at price appreciation. You have to add the dividend, which is big for houses (the roof) and smallish for most stocks.

nn

2. If house prices regress to the long-term inflation-adjusted trend line very rapidly, they might need to fall 25%, as the story says. But it’s also possible that they could drift horizontally for a decade. In that case, they would be invisibly losing value because of the ravages of inflation, but it might not seem as painful to homeowners.

nn

3. As I said in the cover story podcast, I’m not advising buyers to stop shopping. If you see a place you really like, you think the price is fair and affordable, and you aren’t planning to move again anytime soon, you should seriously consider buying it. Sure, the price might go down more, but market-timing is tricky and in the very long run a 10% or even 20% difference in the price might not look that significant.

n