The financial press should be all over a new report by Fidelity Investments that finds, not surprisingly, that housing underperforms stocks and bonds as an investment.

According to the report entitled, "The Equity You Live In: The Home as a Retirement Savings and Income Option," performed by the Fidelity Research Institute, which is dedicated to advancing "knowledge of how proven investment theory and public policy can be put into practice to help Americans invest wisely to meet their financial needs," housing equity's role is changing; there are returns and risks to investing in real estate, and there are emotional and behavioral factors that "make it hard to draw down home equity."

Before going further, please note that the report's scope is owner-occupied primary and secondary housing, not rentals.

The impetus for the study is the relatively large 50 percent gain in home values over the last five years, which has encouraged many to tap into their home's equity to fund retirement and other wants and needs. The question is, will homeowners be able to continue to do so?

Equity is the difference between what you owe on a home to a bank or other lender, and that amount for which you can sell the home in the current market. The unrealized gains in owner-occupied real estate are staggering -- approaching $19 trillion as of 2005, says the report. Homeowners have reveled in cashing out equity, reaching a record $243 billion in 2005, the report attributes to Harvard University's Joint Center For Housing Studies' "The State of the Nation's Housing (2006)."

The report says this could be a generational change in attitudes toward equity. Previous generations treated equity as illiquid, while present generations tap into equity as soon as they are able to. Younger homeowners see home equity as an asset that can be "animated, leveraged, re-fied and drawn against" for home improvement, college loans, market investment and credit card debt repayment which means they will carry larger mortgage debt into retirement than their forebears.

With more than 80 percent of seniors, those over age 65, owning homes, what happens to equity is a $3.95 trillion question, or roughly one-third of their $13.4 trillion personal wealth. Overall equity, says the report, is about 50 percent of homes' value, and it's retirees and pre-retirees' largest non-pension asset.

New homes have risen approximately 5.9 percent annually since 1963. Meanwhile stocks and bonds have performed better, yielding a 5.95 percent return to real estate's 1.35 percent return, after adjusting for inflation. "A single dollar invested in stocks in 1963 would have compounded to $12.36 by 2006," says the report.

The report advises "anyone interested in creating lifelong income for many years in retirement should not rely only, or even primarily, on home equity -- and should, in fact, be wary of 'over-investing' in real estate."

But this is why statistics, as carefully researched as this report's are, can be misleading. First, as the report points out, people need a place to live and homeowners build more equity than renters, resulting in as much as eight times the personal wealth.

That should be reason enough to invest in a home, but there's even more to gain - automony. Houses are unique assets subject to appreciation and devaluation because of condition, age, location, esthetic appeal, size, and other factors, most of which are under the control of home buyers, unlike events which can impact world to local economies.

Comparing stocks and homes is hardly fair. The gains in stocks would be greater if management weren't so greedy. Consider the American Airlines pilots who are discussing a possible strike because senior management is receiving bonuses for returning the airline to profitability, but only after the pilots and flight attendants helped the airline avoid bankruptcy several years earlier by agreeing to cut their own salaries. It's like Don Carty, the embarrassed CEO who was caught padding management's golden parachutes after negotiating the labor agreements, never really left. Those gains should have been returned to labor and to the stockholders in the form of dividends.

And housing is inseparable from its impact on communities. It has a use as shelter, but its desirability also helps build communities, which is made up of workforces and business. Housing is an independent asset that is interdependent on the community, making it take the good and bad of the local economy. As the report points out, if you have more equity in your home, you can weather more storms, but if you don't, you can't.

And maybe that's the real message here -- that housing, like any other asset is about risk and reward with that risk being where and what you buy and how much you put down in relationship to your earnings. By the report's example, if you use a 70 percent mortgage to purchase a home, and home prices go up or down 20 percent, your equity could change +66 percent or -66 percent. If you buy with a 90 percent mortgage, the returns skyrocket or plummet to +200 percent or -200 percent.

Then there are the tax benefits. Not only is your mortgage interest deductible, but homeowners can avoid paying capital gains -- up to $250,000 for single tax filers, and $500,000 for couples in selling homes they've lived in two years or longer within a five-year-period. In other words, the government subsidies are there for a reason -- not to take shareholder money away from investing in stocks, but to make certain that people keep buying homes, which impacts as much as 17 percent of the gross domestic product.

With stocks, such returns are hardly possible, plus most investors, except those who borrow on margin when purchasing equities, invest one dollar for a dollar's worth of stock, and can only hope for market appreciation to provide a return.

So as a foundation for retirement, housing may not be the best bet, which may be good education for those generations who are currently using housing as ATM cards, but it still beats the alternative which is owing your soul to the company store.