The word on Wall Street -- at least according to assorted seers, soothsayers and analysts -- is that now is a very good time to have cash, lots of cash, so that as stock prices fall investors will be well-positioned to pick up bargains.

It's an interesting perspective and raises an obvious question: Is now also a good time to sell real estate?

Home values have been steadily rising in most communities, a stunning contrast -- and a relief -- when compared to what's happening on Wall Street. The Dow Jones Industrial average, for example, closed at 8,019.26 on Friday, down more than 2,700 points from the final bell on January 14, 2000 when the Dow topped out at 11,722.98.

So should you hoard cash with the expectation that property prices will fall and real estate bargains will be available down the road? And if you think prices will fall, is now the time to sell?

Real estate is a local commodity and prices can go up and down. But real estate and the stock market are vastly different forms of investment, which means the strategy which works for one may not work for the other.

How do real estate and the stock market differ?

• The "New Economy" produced a great stock market ride, in some measure because it fed on itself -- if a stock was valued at $10 according to whispers, rumors and the phase of the moon, then why should it not rise to $20? But with the loss of some $6 trillion in stock values during the past two years, the ride is over. Meanwhile, residential real estate has been used and continues to be used for housing, something everyone needs and understands.

• Many once-burned shareholders are not going back into the stock market for a very long time, regardless of where prices rest. With real estate, whether prices rise or fall people still want housing, a reality which establishes some basis for value.

• While the stock market can issue more shares at any time, there are no real estate IPOs where new acreage is magically created with lawyers and paperwork. The old joke about real estate -- they're not making any more of it -- is both ironic and true.

• There are no real estate short-sellers looking to make profits by holding onto homes as prices decline.

While the stock market has been floundering, the basic elements which power real estate demand have not subsided -- people still want to live indoors, the population is increasing, we crowd around desirable areas, and there are significant leverage and tax advantages associated with homeownership that are unavailable with stock. Equally important, interest rates are at the lowest levels seen in years and anti-development efforts continue to hold down new supply.

But if you're concerned about the economy in general -- and it is reasonable to be concerned -- there are some prudent steps you may want to consider:

1. Reduce credit card debt -- the rates are high and the interest is generally not deductible.

2. Get a line-of-credit home equity loan so that if you need cash it will be instantly available.

3. Check out today's mortgage rates. Should you refinance to a lower rate? Go from a 30-year loan to 15 years? Speak with local lenders for details.

4. Watch economic trends in your community. Is the population going up or down? What about the job base? How are sale prices compared to six months ago? Is sale volume rising or falling? Local brokers can help with real estate questions.

For more articles by Peter G. Miller, please press here.

Published: July 23, 2002

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .