If you read the personal finance articles in magazines and newspapers, more than likely you’ve seen many articles that tell you to exclude your home equity from your projected net worth at retirement. Financial planners or the journalists who quote them say that homes make for relatively poor investment; and because you will still need a place to live after you retire, money tied up in a house certainly won’t do you much good.

Regardless of what the media reports, housing has always been the leading source of wealth for most Americans. Historically, however, the media have primarily focused on dire talk of housing peaks and bubbles. Take this quick review of headline stories and so-called expert advice from the past 50 years.

In the late 1940s, $8000 to $10,000 seemed like an outrageous amount to pay for a house. In the late 1960s through the mid 1970s, $30,000 to $50,000 seemed well beyond anything reasonable. In the early 1980s, popular belief held that at $100,000, home prices in California could only go down. Today, similar comments about peaks and bubbles are being raised. But just as those past voices now sound foolish, so too will current opinion as we look back from the future.

Can some home prices soften or decline in the short run? Sure. They have done so before and will do so again. Local economies ebb and flow, but over periods of 5, 10, 20 or 30 years, well-selected properties will continue to register high-profit appreciation.

Say a couple invests $10,000 in a $100,000 home. They finance their purchase with a 30-year, $90,000 mortgage at 7.75 percent. After eight years they will have paid down their mortgage balance to $81,585 with 4 percent a year appreciation for eight years, their home’s value will have grown to $136,860. If we subtract the balance of $81,5858 from

The home’s appreciated value of $138,860, we find that the couple’s original $10,000 investment has increased more than fivefold to $55,275 of homeowners’ equity. That result yields an after-tax annual rate of return of around 24 percent. Naturally, in recent years, lower rates of interest and high rates of appreciation have produced rates of return far in excess of 24 points.

In contrast, depending on whose numbers you use, stocks have yielded an average pretax return of between 9 and 12 percent a year over the longer run. On an after-tax basis, a 10 percent a year return on stocks is considered very good. In fact, over the long term, fewer than 2 percent of professional fund managers have been able to consistently earn after-tax returns on stocks of more than 10 to 15 percent a year.

Unless you develop short-term ownership strategies such as fix and flip, view your home equity as long-term wealth, not wealth that you check three times a day by turning into SNBC. Sometimes local economies do sag. Job growth falters. Also, on occasion, home builders construct too many houses, condos, and apartments. Excess supply gluts the market.

Nevertheless, these localized downturns rarely last for more than a few years. In fact, severe downturns such as occurred in California in the early- to mid 1990s provide enormous opportunities to build home equity wealth by trading up. I know California homebuyers who, in 1993, bit the bullet and took a mild loss on their $200,000 home. They then bough a $400,000 home that had sold three years earlier for $550,000 in equity, and their monthly payments (due to refinancing) are only 15 percent higher than they were in 1990.

If you own stocks, you must diversify your holdings even if you’re investing for the long run. Stock prices and the profit performance of even the best of companies can plummet and remain down for decades. Name brand highfliers of earlier eras can end up in bankruptcy. (To name just a few: Polaroid, Enron, United Airlines, WorldCom, U.S.Steel, Pan Am, and Pennsylvania Railroad.) owning the stocks of just one or several companies can certainly expose you to financial ruin – especially when you plan to hold those stocks forever.

Homeowners confront no similar risk. Do you know of any decent homes that would sell today for less than they sold 5 or 10 years ago? Check the historical prices in so-called less-desirable neighborhoods. You will find that even these properties have appreciated. Certainly, individual owners can let properties run down, but I do not know of any urban, predominately owner-occupied neighborhoods in the United States where market values have declined from where they stood 10 years ago.

Most retirees today have gained greatly form the increased value of their home equity, but fortunately, most of these seniors haven’t had to tap into it. Today’s retirees still draw substantially from social security, company pensions, and, yes, the increase in stock prices.

Tomorrow’s retirees, though, can’t count on the same degree of income support from social security, pensions, or stocks. No one predicts huge increases in future social security payment. (Indeed, approaching insolvency more often occupies the stage of debate.) Fewer and fewer companies offer guaranteed pensions. And who knows where stock prices might land 10, 20 or 30 years from now. Further, what will happen to those stock values when tens of millions of boomers try to liquidate their 401(K)s and IRAs?

In a world that presents great uncertainty, one constant remains: As long as the United States continues to grow its population and its economy, hosing values and rent levels will continue to go up. Unless you know that you can safely and surely secure your financial future in other ways, don’t leave your home equity gains to chance. Choose your home and your home financing with a calculating eye on the future.