A Look at Investments: Real Estate vs. Stocks

Interestingly enough, a new study has found that American’s investing activity has shifted some due to the pandemic. MarketWatch’s latest article provides that 90% of respondents said they would rather invest in a home over stocks. Included below is further information regarding the study:

The most common reasons people cited in choosing housing over stocks seemed to be about comfort and stability, rather than seeking a better return. The most commonly-selected responses were that the home was their “desired living environment” and “provides stability” and that house prices were “less volatile.”

Research has shown that residential real-estate has acted as a strong hedge in most bear markets, with the notable exception of the Great Recession. The early days of the pandemic is a prime example: The S&P 500 index SPX, +0.36% lost over 20% in the first quarter, while the Case-Shiller National Home Price Index increased 1.4%. That stock market has, of course, recovered since then.

That said, Americans were more likely to cite higher housing returns in 2021 than in the year prior, likely a reflection of the incredibly fast pace of home price appreciation nationwide.

But people’s attitudes toward the housing market have shifted over the course of the pandemic, the researchers found. “The preference for housing dipped in October 2020 and returned back to the pre-COVID level by February 2021,” the study’s authors noted.

Diversifying your investments is key. If you’re only dabbling in stocks right now, look into investing in a home. I would be happy to help you find a great investment property!