While economists, investors and even [tag]Federal Reserve[/tag] policymakers express concern that the [tag]slumping real estate market[/tag] will hurt the economy, [tag]U.S. stocks[/tag] may well be getting an unexpected lift from problems in the sector. That’s because a wide range of real estate experts agree that much of the current weakness in sales and home prices is due to investors pulling out of the sector. And some stock market experts say that the money being pulled out of homes is finding its way into stocks.

“We know new money is not going into [tag]real estate[/tag], since it looks more and more like that is dead money,” said Chan. “I’m not sure the flow has been strong enough to cause an avalanche. But it’s been enough to help the [stock] market hold its own.” He estimated that from a quarter to about half the gains in the major stock indexes this year could be due to the housing market weakness. How much money has flowed from real estate to stocks is impossible to say for certain, but even a conservative estimate would suggest it is in the range of hundreds of billions of dollars. The latest annual survey by the National Association of Realtors found that 27.7 percent of all home buyers in 2005 were buying homes as an investment, rather than as a primary or even secondary residence for their own use.

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