Surprisingly, real estate investment properties are looking more attractive than stocks! Looks like we’re finally getting over the crash in housing prices that crippled the economy during the recession. A survey done by Bankrate shows that most Americans, 27%, to be precise, prefer to invest in real estate investment properties for money they won’t need in ten years, followed by cash as a close second with 23%. Stocks followed behind at a distance with 17%. The question here begs to ask, why do Americans prefer real estate investment properties over stocks?
What does the survey show?
We’ll answer why real estate investment properties were chosen over stocks. But, first let’s share with you a little more about the survey that Bankrate conducted.
Interestingly, millennials (ages 18-29) were the most conservative when it comes to risk taking. They overwhelmingly chose to invest in cash as opposed to any other method. Perhaps this is simply because they can’t afford houses (or think they can’t afford houses). Or perhaps they still don’t think they are capable enough to take any risks because they’re in the start of their career paths. On the other hand, older individuals aged between 30-49 were the most likely to take a little risk by choosing real estate investing as their number one choice.
The survey also showed that individuals who make the least income (less than $30,000/year), were less likely to take the risk in investing in real estate investment properties and opt for cash instead. Whereas, those who made between $30,000 and $50,000 were most likely to choose real estate investment as the best method. And those who made $75,000 and higher preferred to take the most risk by investing in stocks.
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Overall, the majority of Americans, 27%, chose real estate investment properties as the best method, 23% chose cash, and 17% chose stocks. Gold ranked next with a 14%. And surprisingly, with an all time lowest ranking, came in bonds with merely 5%.
Why is real estate America’s #1 choice?
You can probably sense the answer from looking over the details of the survey. The top reason real estate investments are being reconsidered by the majority is because it requires less risk taking than stocks. We can’t disagree that stocks might generate more cash in the long run, but people realize that it requires more risk taking than investing in real estate investment properties. That’s why we find that those with high incomes are most likely to take risks–risk will effect them the least. Stocks are profitable, but risky. Cash is safe, but generates no profit. Real estate investing is the nice middle; it has low risk, with a potential for high returns.
Another perk that Americans find in real estate investing is that it’s easier to understand than stocks. Stocks need a deep understanding of how they work. So does real estate investing. But, the difference between the two methods is that understanding how to find, manage, and deal with a real estate investment property is a lot simpler than understanding how to invest in stocks. Individuals find that it requires less time and effort.
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People are also trusting real estate investing more because of the positive indicators they’re witnessing. There is a lot of trends that highlight the market’s strength. For instance, according to the U.S. Census, in April of this year, new home sales increased 8.1% from March; and in May, sales of new homes were the highest in seven years with a 2.2% increase. Sales of existing homes also rose significantly with a 5.1% increase in May. Home values in general are also on the rise, with an increase of 26.8% in homes since February of this year.
In addition to this, Americans are witnessing the rising interest of foreigners in investing in U.S real estate investment properties. Foreign investors are realizing the high potential of the U.S real estate market, perhaps even before our nation itself. This is encouraging Americans to notice the potential of real estate investing themselves.
What do we make of all this?
All these strong indicators highlighted above, show that the real estate investment market is quite strong. It has less risk than stocks and it’s more profitable than safe methods like cash investing. The interesting thing is that Americans are getting past the hurt from the recession period and realizing the potential in real estate market again.
Overall, whether you’re a new investor or a professional one, we recommend that you continue your path in real estate investing with no fear. Mashvisor has plenty of tools to help you understand the market better and find the best real estate investment property that suites you.