An ungainly-looking rocket plane punched through the Earth's atmosphere and then glided home to a desert landing Monday in history's first privately financed manned spaceflight - a voyage that could hasten the day when the final frontier is opened up to paying customers.

Pilot Mike Melvill took SpaceShipOne 62.2 miles above Earth, just a little more than 400 feet above the distance considered to be the boundary of space. The flight lasted just 90 minutes.

The spaceship - with its fat fuselage and spindly white wings - was carried aloft under the belly of a carrier jet. The jet then released the spaceship, and its rocket engine ignited, sending it hurtling toward space at nearly three times the speed of sound. It left a vertical white vapor trail in the brilliant blue sky.

SpaceShipOne touched down in the Mojave Desert at 8:15 a.m. to cheers and applause.

Building wealth through real estate investment...

As discussed in last week's newsletter, I went to a high-powered real estate class in Las Vegas last week. The topic was "Building Wealth Through Real Estate," and it was an eye-opener. Everyone knows that real estate is the best and most reliable long-term investment -- whether you're buying your own residence or an income property. But once you've crunched every last one of the numbers, the superiority of housing over securities or commodities becomes very clear -- and very dramatic.

Because I'm so terribly, terribly shy, I gave a presentation on an investment home I am working on right now. A number of my classmates, fellow Realtors from all over the country, asked for follow-up information, so I prepared this page, which goes into everything in immense detail. This serves as a supplement to my investments page, and ultimately much of the class information will make it onto that page.

Here's the Reader's Digest version: With a cash outlay of about $30,000, an investor can gain control of a $130,000 asset that can produce a total after-tax yield of 14.27%. That comes out to 19.82% before taxes, which is how you should compare it to competing investments. Because leverage is power, a smaller down payment can produce even more impressive results. At 5% down, the initial outlay would be about $10,000. Even allowing for Private Mortgage Insurance, the after-tax yield could be 23.10%, a before-tax equivalent yield of 32.08%. No one can promise future results, but there is simply no other investment that can produce these high and highly-reliable results.

On the other hand...

It wouldn't be Phoenix without the Arizona Republic crying that the sky is falling. In its June 16, 2004, edition, the paper casts doubts on investment trends in the Phoenix area. But the previous day's paper highlights all the commercial development going on in just the areas under discussion. And on the same day, the paper laments an incipient housing shortage, which, if it happens, cannot be anything but good for investors and developers.

The fact is, rental housing in general has been fairly soft while interest rates have been so low. It is reasonable to surmise that as interest rates rise, rental housing should firm up. And rental homes in predominantly owner-occupied neighborhoods should continue to appreciate along with their owner-occupied neighbors at impressive but not astounding rates.

In-state or out, if you can afford to add one or more rental homes to your investment portfolio, you should see very impressive long-term results. Not short-term results, though. While some real estate investments throw off substantial amounts of cash, much of the benefit in residential investing will come in the form of tax savings through depreciation and long-term wealth-building through appreciation.

We are all investors now...

But even if your own residence is your only property, you're still a savvy, profit-seeking real estate investor. And the chances are excellent that your home in the Phoenix area is producing great wealth for you as you undertake the daily chores of living. Your home is probably appreciating at impressive if not astounding rates. (If you're curious, you can request a Comparative Market Analysis of your home's value.) But more importantly, the IRS really, really wants for you to own your home. In addition to that mortgage interest deduction that is your reward for filing long-form, your capital gain in your home, when you sell it, is excluded from taxation up to $250,000 per person, $500,000 per couple. You can take advantage of this exclusion every two years, so handy homeowners can use it to pursue a "quick flip" investment strategy slowly, with the profit on their refurbishing coming to them income-tax free. But if even all you do is live in your home, your wealth is very probably growing all around you.

Blowing bubbles at the news...

The other favorite lament of professional crybabies, right now, is that we're surfing on a "housing bubble." The claim is that home prices are artificially high, like internet stocks before the crash, and they will return to some idealized "normal" level when the bubble bursts and people come to their senses.

There are good reasons to doubt this is so, at least in the Phoenix market. There is no artificial demand, as there was with dot.com stocks with absurd price-to-earnings ratios. No houses are sitting empty, for example. Certainly the historic lows in mortgage rates will not continue. They were caused by the flight from securities after the dot.com bomb, and the current rate creep is evidence that this formerly "scared" money is tip-toeing back into the securities markets. Government deficit spending is soaking up investment capital, as well, which argues that rates will continue to creep upward. During the refinance boom, a great many people over-encumbered their homes, and this surely will come back to haunt some of them. Bad news for those people, and it is sure incite much professional crybabyism. But the value of the affected homes will not collapse to zero, like a faded Wall Street Darling. Investors and other bargain-hunters will buy each of these homes at some very large fraction of its fair market value and life will go on.

The differences between housing and securities are decisive: Housing is fixed capital investment, not a thing of hopes and dreams. Investment in housing, whether by owner-occupants or landlords, is often accompanied by valuable capital improvement, and almost always by capital maintenance. And people will always need a place to live. It's possible to over-build or to build badly, which can depress prices. It's possible for governmental or natural catastrophes to induce a hiccough in the steady upward trend in home values. But until people resolve to stand outside all night in the rain, I expect that the only bubble in housing will be the temporary bubble in the number of housing bubble crybabies.

-- Greg Swann