It is very easy to equate the continuing rise in home values with the spectacular rise in stock prices during the late '90's. To see parallels causes speculation about the possibility of a house price "bubble" that will burst, resulting in the kind of dramatic declines in value that have devastated the stock market.

Let me say once and for all, the speculation about a "bubble" is no more than a superficial analysis of rising home prices. Any parallels between stock prices and home prices stem from the erroneous notion that the stock market and the housing market are comparable and will behave in similar ways. Homes are not stocks or commodities. Apples are not oranges.

Most people buy homes for far different reasons than they do stocks or other financial instruments. Perhaps most important, a house provides a family with a place to live. It is not just another piece of paper to be filed away and forgotten.

Yes, there is an "investment" factor involved, but homes and stocks perform very differently and are subject to very different influences. A home is a relatively stable investment and most homebuyers treat it as such. It probably will not earn the spectacular returns sometimes generated by other financial vehicles. But a home is also unlikely to show the dramatic declines that are often associated with other investments.

Every year, more than a million new households are being formed. For the foreseeable future, builders will have to construct about 1.6 million new homes annually just to meet the needs generated by population growth and new household formations.

Like politics, the, housing market is really a local phenomenon. The high housing values in certain metropolitan areas, are a result of the imbalances between supply and demand caused by growth restrictions that have limited the availability of developable land.

Eventually, interest rates will begin to gradually rise. This will have an effect on housing value, but nothing dramatic. The increase in home prices may slow, but the housing market will not undergo anything remotely like the volatility that the stock market is currently experiencing.

Prices for construction labor and materials continue to increase, and growth and land use restraints are driving up the prices of building lots - with little relief in sight. For the so-called housing "bubble" to burst, for home values to decline dramatically, the cost of building a home would have to decline dramatically. And given building costs and land use restraints, that is very unlikely.

The tax benefits that apply only to housing. make it a very good, longterm investment, even if values increase only slowly. Mortgage interest and property taxes are deductible, the value of housing services generated by homes is not taxable, and profits of up to $500,000 on the sale of a principal residence are excluded from tax on capital gains. These benefits favor keeping a home rather than buying and selling homes quickly and often.

Unlike stocks - which can be purchased and sold in minutes - a home is a purchase that typically takes careful deliberation and a significant amount of time.

People buying homes examine all of the alternatives, everything from the style of house available to the test scores of local schools, before making a decision.

And once they have made the commitment to a home and neighborhood and moved into the home of their choice, buyers are unlikely to turn around and repeat the process immediately...or repeatedly.

This is not to say that home prices cannot decline.

Occasionally, local markets may experience stagnant home prices - or even declines - if a severe economic setback causes housing demand to weaken in a particular area or region.

On a national basis, home values have never once shown an annual decrease. For this to occur, the country would have to be in very dire economic straits indeed.