If you had asked the question, “is real estate investment better than stocks?”, a decade ago, you would have gotten a very different answer. While in the throes of the recession, both homeowners AND stock market investors were reeling from huge losses in equity.

My how things change in a decade!

In a recent poll published by Gallup, American sentiment has changed regarding the best investments for building family wealth. As you can see from the chart below, 35% of those polled chose real estate as the best long-term investment versus the 27% who chose stock investments.

The story was very different from 2008-2010, when savings account and CDs were considered among the best long-term investments, as sentiments fell on stocks and real estate. Gold was added to the poll in 2011, and it quickly became the favorite, topping the poll in 2011, 2012, and 2013. As prices on gold fell, real estate and stocks once again rose to the top as economic recovery from the recession continued.

Real estate reached it’s highest polling level, according to Gallup, in 2002, when 50% of Americans listed real estate as the best investment.

Not surprisingly, people who own stocks are more likely to rank stocks as one of the top investment vehicles (37%). Among investors who own BOTH a home and stock investments real estate is still considered the best investment at 40%, and only 38% ranking stocks as the best investment. What is interesting is that the percentage of Americans participating in the current bull market has not recovered to pre-recession levels. Prior to the Great Recession, 62% of Americans participated in the stock market in 2007. This figure fell to a low point of 52% in 2013, and only improved slightly to 55% in 2019.

The investors more financially able to weather long periods of downward trends (namely older Americans and the high income earners), have stuck with stock market, while the average middle class investors have shied away from the risks of the market. Only 27% of all adults polled agreed that stocks were the best investment, even though, as a general rule, the stock market has outperformed real estate over the long term, in regards to overall returns. This may be a primary reason why, across the nation as a whole, real estate is still seen as the underpinning of middle class wealth.

For Northern Virginia in particular, real estate continues to be a strong market, with healthy growth in home values. Buyers still outpace sellers in many communities, and the addition of new high profile employers, such as the Amazon HQ2 in Arlington, will continue to drive demand for years to come. Current homeowners in the vicinity of the Amazon development are already seeing bumps in home values before ground has even broken on the development.

Obviously, the real answer as to whether real estate is a better investment than stocks depends on your personal financial situation, your appetite for risk, and other individual factors. But in terms of public sentiment, real estate is a strong contender as a primary investment for the foundation of wealth-building.

Whether you are looking to buy or sell a home in Northern Virginia, we are always here to help with all your real estate needs! If you are unsure of your home’s value or if you are thinking about buying or selling, contact Jason at 703-298-7037 or Jason@JasonAndBonnie.com.