GM STOCK WORTHLESS, HOME VALUES STABILIZING

Just as the Titanic was the ship said to be unsinkable, who would have ever thought General Motors, once the most powerful and profitable corporation in America, would become insolvent? The value of GM’s stock hit $0.31 last week and may actually be at zero by the time you read this.

While many investors have made substantial gains investing in stocks such as GM, one must also realize that there is no intrinsic value to a share of stock. It is also true that many speculators have made substantial gains investing in real estate over the years. In fact, it has become common place over the past few decades for homeowners to consider the investment in their family residence as just that – a financial investment.

But let’s not lose sight of the significant tangible value of real estate! Whether the value of a home goes up or down, it continues to provide the security, shelter and piece of mind for which it was purchased.

Though there are differences between investing in financial securities and real estate, there is one major difference that should not be overlooked. The value of real estate never goes to zero! And while real estate values have declined across the country along with declines in values of many other assets, the primary purpose of one’s home remains fulfilled as long as it continues to be lived in.

As inventories of homes for sale continue to decline, stability in homes prices is gradually being restored. Holders of GM stock certificates will never recoup their losses. The return of the conventional wisdom that homes are purchased primarily to live in and secondarily as an investment is a welcome change.