Is It Better to Invest in Stocks or Housing? Americans Say Housing

A new study from the Federal Reserve Bank of New York found 90% of Americans prefer owning their primary residence than investing in the stock market. More than half of respondents would also choose becoming a landlord than purchasing stocks, reports MarketWatch. The study analyzed Americans’ attitudes toward homeownership and if it shifted during the pandemic. In addition to answering whether they believed a home or financial stocks were the better investment, respondents also listed the factors contributing to their choice. The top reasons for siding with homeownership were comfort and stability, not about seeking a greater return on investment.

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 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.

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