Is real estate or stock best investment?

By Alexandra Svokos
Posted on July 24, 2024

These days, it feels like there’s not a lot Americans agree with each other on. But we do seem to have one consistent belief: that real estate is a great long-term investment.

Americans voted real estate as the best long-term investment, according to a new Gallup poll. And in fact, real estate has come out on top of this poll every year since 2014, beating out stocks or mutual funds, gold, and savings accounts or CDs.

This year, 36% of Americans put real estate on top. Next up was stocks, at 22%, followed by gold, 18%, and savings accounts or CDs, 13%.

Coming in at the bottom of the list was bonds, at 4%, and cryptocurrency, at just 3% — not a huge surprise, considering many people are still trying to figure out what cryptocurrency is.

Somewhat surprising

That real estate has been such a consistent winner this past decade is interesting, though.

Now, don’t get me wrong: Both real estate and the stock market have historically been great long-term investments. They have both exceeded the rate of inflation, meaning that if you were invested, you saw some great returns in the long-term.

They also both generally have higher rates of return than safer vehicles like savings accounts, CDs (even with the high CD rates these days) or bonds.

But lately, stocks have given a better return than real estate. And those returns have come as investing has gotten increasingly accessible thanks to tools like online brokers and trading platforms.

Real estate, meanwhile, has only gotten less accessible, if you’re not already a homeowner, as prices have been rising and down payments are a bigger barrier to entry than, say, throwing $100 into a Vanguard account.

That’s particularly true now, when people like me are arguing it is the worst time to buy a house — between high mortgage rates and prices. [Ed’s. Note: Unless you’re in the sweet spot of selling a larger one and downsizing.]

Less volatile than stocks

If you’re an older homeowner or real estate investor, though, it’s easy to understand why you’d say real estate is a better investment than the stock market. From 1990 to 2006, returns on housing were higher than stocks, according to Investopedia.

But since 2006, stock market growth has exceeded housing. Using the S&P 500 vs the Vanguard Real Estate Index, Sean Ross at Investopedia found that from December 2013 to December 2023, the real estate index had a 37% total return, while the S&P 500 had a 155% total return.

Even so, again, I can understand why people stick with real estate. It’s a simple idea, really, which is that real estate feels safer.

The stock market has bumps and volatility in short-term segments, while housing generally keeps a more slow but steady climb.

And you can’t disagree that on a rainy day, a roof over your head feels like a better investment than a share of Google stock in your brokerage account.