Half of U.S. homeowners seem to believe that buying a home is the best path to wealth. But they probably are wrong.
A recent survey of nearly 5,000 recent homebuyers by the National Association of Realtors found that 50% of all respondents believe owning a home is a better financial investment than purchasing stocks.
An even larger percentage — 53% — of homebuyers between the ages of 68 and 76 say owning a home beats investing in stocks. That is the highest percentage among all the age groups surveyed.
However, the data suggests otherwise. If you set aside the recent pandemic years, historically, stock returns have been more generous than those associated with homeownership.
A few years ago, we reported on a study by three universities that concluded that gains from stocks and bonds historically have exceeded gains from property appreciation.
Of course, not everyone agrees that stocks always beat real estate as an investment. And even the study’s authors note that if you do not put your savings to work by investing in stocks and bonds, you are likely better off taking the cash and putting it into real estate — at least compared with parking the money in something like a savings account or CD.
Ultimately, history has shown that investing in stocks and purchasing real estate both are good ways to build wealth. And in fact, doing both things probably gives you a bit more diversification of your assets, which is often a good thing.
If you are thinking of buying a home, stop by the Money Talks News Solutions Center and search for a great mortgage rate.
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