I recently enjoyed watching a reporter’s attempts to dismiss the strength of the Atlanta real estate market. He stated that "while the current round of interest rate increases has yet to be felt in the housing market, it is only a matter of time" until buyers begin to balk at current prices and interest rates.

Meanwhile, the Office of Federal Housing Enterprise Oversight reports that average home prices nationwide increased 7.71 percent from the first quarter of 2003 through the first quarter of 2004, while the price of other goods and services grew at a rate of only 1.59 percent.

Residential real estate continues to be one of the bright spots in the economy, with most homes selling in reasonable time frames and prices generally showing strength. This has especially been the case in entry level homes, as renters and young workers made the jump to home ownership.

But what are the real underlying causes that motivate home buyers?

I believe there are three primary reasons people are buying houses today, and these reasons apply across all price levels and areas. And anyone with a stake in real property would do well to understand them.

1. Owning a home is clearly perceived as part of the American Dream, whatever that is.

This reason is primarily financial in nature, and the idea here is that home ownership is closely associated with wealth accumulation.

When you ask first time buyers why they are willing to pay more to own than to rent, the answer typically has to do with "wasting money on rent" and "wanting to make an investment."

It is true that, for most Americans, the best investment they ever make is in their own home. Young couples frequently see the purchase of their home as a "rite of passage," allowing them to begin building an estate. And older purchasers recognize the financial benefits of ownership as being hard to resist.

Even though inflation is almost nonexistent in our economy today, we are still seeing homes appreciate at a rate well in excess of other costs. The almost inevitable conclusion is this: if you have to live somewhere, why not own it instead of rent it?

The bottom line here is that home ownership remains one of the primary means of wealth accumulation in our society today, and lots of people realize that fact.

2. Apart from any financial considerations, there is tremendous pride in ownership of real estate.

This plays to the theme of America as a nation of rugged individualists, each being able to express their unique interpretation of freedom as they wish.

I know what you are thinking. You are saying to yourself that here is the weak link in the chain, and that "pride" has an insignificant role in most decisions to buy. But I would say you are wrong.

I believe there is a deep need within most people to have a space that they can call their own. Whether it’s a ranch style house on a quarter acre lot with a white picket fence, or the inside of a high-rise condo in Buckhead, most people recognize the difference between a house and a home, and everybody wants a home.

3. Finally, there is still a wide awareness of the long term tax benefits of home ownership.

Here we see our own government providing subsidies for those citizens who will follow the path perceived to be in the public interest. And in this case, that interest is clearly away from renting and closer to ownership.

The societal benefits of community involvement and citizen responsibility may or may not be specifically attached to owning a home, but Congress has made no effort to moderate its favorable tax treatment of home ownership, regardless of the cost.

As an example, one could make a case against the deductibility of home mortgage interest for those whose income exceeds a certain level on the basis that rates are already low and the fact that these individuals are likely already home owners.

But instead of limiting this tax break, Congress has sweetened it. Not only is interest deductible for owners on most home loans up to one million dollars, but an additional hundred thousand dollars of debt can be used for any purpose and still remain deductible. This loophole alone has allowed millions of well-to-do homeowners the opportunity to use a technique known as "debt-shifting," this giving themselves a tax break for otherwise non-deductible debts.

As I talk with homeowners at all levels, I come across these three basic factors influencing the decision to buy: pride, wealth accumulation and tax benefits.

Each one of these factors makes a significant contribution to the lure of residential real estate. In combination, they weave a potent mix of psychological and financial indicators which have proven hard to resist in the history of this nation.

Over the next several weeks, we will look at each of these motivators and see specific ways home owners have benefitted from their investments in their homes.

Next week: Home owners benefit financially at almost every level of the economic ladder. Will this continue?