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CNN Live At Daybreak

Investors Pulling Out of Stocks, Putting Money Into Housing Market

Aired August 06, 2002 - 05:18   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: OK, after that you certainly don't like the stock market, right? Well, you're not alone. Investors are pulling out and putting their money into the housing market. But does it mean a big payoff in the end?

CNN's Kathleen Hays reports.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Good afternoon, Classic Realty Group.

KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Real estate offices across the nation are swamped with eager buyers. With stocks down 30 percent over the past year and home prices up seven and a half percent, scared investors looking for a safe harbor are flocking to realtors like Charles Oppler.

CHARLES OPPLER, CLASSIC REALTY GROUP: There are many people that want to take their cash out and hopefully have taken their cash out quite a while ago, looking to put it in a more secure investment like real estate.

HAYS: While the stock market swings like a roller coaster, homes are rock solid. Since the 1960s when records were first kept, there has never been a calendar year when the median home price declined. Another advantage, a home is an investment you can live in and one where you deduct your mortgage interest. When you sell it, the tax break is sweet, for a married couple up to a $500,000 tax exemption.

Stock investors pay a tax of 20 percent on long-term capital gains. Even though home prices are up, mortgage rates remain near all time lows. This helps keep homes affordable. Even so, some worry the hot housing market is over heated, like it was in stocks. And those looking at real estate as investments should be cautious.

BARRY HABIB, GMAC MORTGAGE: If you look at stocks right now, stocks are probably on the lower end of their spectrum, where real estate prices are probably on the higher end. So from strictly an investment perspective, I think that you're probably better off long- term with results investing in stocks than you would be in real estate.

HAYS (on camera): If your nest is empty and you're ready to downsize, many realtors say sell your house now, cash in on the recent run-up in home prices, because interest rates are low now but once they start to rise the hot housing market could quickly cool off.

Kathleen Hays, CNN Financial News, New York.

(END VIDEOTAPE)

COSTELLO: It's a gamble whatever you do, isn't it?

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