Real estate's new realities

Say what you will about raging participation in the stock market. Most middle-class Americans still put the bulk of their personal wealth in real estate.

And homes have often turned out to be five-star investments. In some regions, values have become downright dizzying.

A couple of Boston zip codes away from where I'm writing this column, the average price of a starter home between January and September 2001 was $372,653, according to the Dow Jones real estate index. That's an 18 percent rise over the same period last year.

Great for homeowners watching their equity soar. Frustrating for those trying to buy.

And probably a sign of some bubble trouble.

Home sales fell off last month. Next, prices might begin to slide. Lower home values could further inhibit spending on all fronts.

And recession worries will have finally, quite literally, hit home.

In one sense, some analysts argue, it's an inevitable correction. True, buildable land may have inherent worth - they're not making any more of it, as is often said.

But for years, no price seemed exorbitant. A decade of on-paper wealth and dual-income households helped push ordinary Tyvek-and-plywood houses on quarter-acre plots toward a half-million dollars in the real estate hot spots.

Sound sustainable to you?

Today's lead story looks at one corner of the real estate market where growth may actually endure.

Second homes are by no means accessible to all - less so in the face of economic contraction.

But owing to a demographic trend (retiring baby boomers) and a post-Sept. 11 interest in remote family havens, such properties are looking like pretty wise buys.

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