Is Real Estate Really the No. 1 Investment Right Now?
We know: You’re getting mixed messages. Homeownership is at record lows. But so are mortgage rates (even though some mortgages are harder to come by). Prices are inflated in some markets. Still, real estate edged out cash (the 2013 and 2014 pick) in a survey of investments Americans would park their money in over the next decade.
The source: Bankrate.com, which says Americans love real estate once again (garnering 27% of the vote), and are less keen on the financial industry.
“Cash came in second with 23 percent of investors, only 17 percent said the stock market is their preferred place for long-term money and just 5 percent said they would put their long-term money in bonds,” wrote CNBC.
“For many investors, the tangible nature of real estate simply offers much more peace of mind than the intangible nature of stock and bonds,” certified financial planner and vice president of Proctor Financial in Sherborn, MA, Stephen Doucette told them.
As for the stats: “The S&P/Case-Shiller 20-City Composite Home Price Index, which measures the value of residential real estate in 20 major metropolitan areas, has generated a hearty annualized 9.2 percent return over the past three years through June 30, but produced an annualized 0.4 percent loss over the past decade. Meanwhile, the S&P 500 index, a broad measure of the U.S. stock market, grew an annualized 14.8 percent over the past three years and 5.87 percent over the past 10 years,” they write.
The crash may have had a little something to do with those numbers, of course. And you can’t cash that home in as quickly as you could a stock or bond, even in the era of bidding wars and cash buys.
This is all fodder for investors to ponder, but what about average Joe and Jill? Jonathan Smoke, our own chief economist, is bullish on real estate and has told us not to lose faith. “The market is clearly shifting toward more of a balance in the second half of the year,” he wrote in his column this week. “Combined with a temporary reprieve from rising mortgage rates and slightly easier access to credit, buyers should find it easier to purchase a home in the months ahead.”