Many Americans have substantial portions of their net worth tied up in their place of residence. While housing brings benefits both tangible (a place to sleep) and intangible (a sense of belonging to a community), one thing it has not historically offered is solid capital gains appreciation.

That's what one of the leading experts on U.S. housing, Yale professor Robert Shiller, told me last week when I interviewed him in front of a live audience at Motley Fool Headquarters. Shiller, author of the new book Finance and the Good Society, explains why in the video below. (Running time is 1:44; a transcript is provided below.)

Brian Richards: How do you think we should be thinking about the purchase of a home? Is a home an investment?

Dr. Shiller: Well a home is definitely an investment in the sense that for most people it's the main part of their wealth, and it's something that they might rely on if there's an emergency. You could sell the house and pay for something that's more important to you. But the question whether it's an investment may have another nuance to it. The question is, is it a good investment in the sense that it will return you financially.

Now the thing is that a lot of the benefits you get from housing are in kind. That is, you can live there. You might like it or you might not, right? We're all different, so it's not like other investments that are fungible, that you can measure; it's different for different people. But you can measure the capital gains part of housing. There's also a tax advantage that might be removed, by the way, but currently there is a tax advantage to home ownership.

But the capital gains component I think is overrated. Because my data show that from 1890 to 1990, 100 years, there was virtually no real inflation-corrected appreciation in home prices. And I think those people in 1990 should count themselves as lucky that they ended flat, even, because it could well have gone down.

There's no guarantee that home prices are going to go up. I think we've gotten into an illusion about that.

For more insights from my talk with Robert Shiller, see: