Homeownership is often seen as an investment and is a huge part of the American Dream. It’s about having a place to call home and a way to build generational wealth. While homeownership can be advantageous and a good investment in some cases, not everyone thinks so. According to a recent survey by RedFin, more than half (52%) of people ages 35-44 think the stock market is a better investment than real estate.
Looking at the numbers
In RedFin’s study, every age group except people ages 35-44 thought real estate was a better long-term investment than the stock market.
As you can see in the image above, 52 percent of people ages 35-44 thought the stock market is a better long-term investment compared to 48 percent who believe real estate is a better investment.
These numbers are dramatically different from those who are 55-64, with 62 percent thinking real estate is a better investment.
The stock market has taken a huge dip recently so it’s no wonder that most people think that real estate is a better investment. But what is up with this one age group being the outsider and trusting in the stock market more?
A look at the Great Recession
What sets this age group apart is their age and experience with the Great Recession. In 2008, the housing bubble burst and had a ripple effect across industries. Nearly everyone felt the impact of the recession in some way, but this age group was a bit different.
According to the RedFin article on the study, “The oldest Millennials and youngest Gen-Xers entered their late twenties or early thirties during the housing crash, which explains why they are more skeptical about investing in real-estate,” said Redfin chief economist Daryl Fairweather.
Younger millennials ages 25-34 have a more favorable opinion of real estate as an investment with 57 percent thinking it’s better than the stock market.
What’s fascinating about this study is that the survey respondents were targeted as people who indicated they bought or sold a home in the past year or were trying to do so. Given this information, it seems like there would be a predetermined interest in real estate.
However, if you take a look at the housing market, temperatures are tepid at best. Not only that, but the rise in student loan debt is hampering homeownership. According to the Federal Reserve, student loan debt prevented 400,000 people from owning a home.
So when it comes to homeownership as an investment — especially with all the extra costs and responsibilities — it may not be what it’s all cracked up to be.
What you can do
Long-term investments are supposed to help you build wealth over time. If you’re a homeowner and part of the 35-44 age group — or any other group — that believes the stock market is a better long-term investment, you can consider selling your home and investing more.
As the housing market cools, it could be harder to sell your home and turn a profit. It can be a lengthy process with realtor fees and even more money to get it market ready.
If you’re looking for some cash and don’t want to make it such a laborious process, you can consider working with Sundae.
We buy homes as-is for the best price and can offer $10,000 in cash advances to help you transition to a new place. Our work is done at a large scale which helps us be able to offer the best price and we always keep the consumer in mind. If you have questions, get in touch with us to learn more.
Whether you’re in the “real estate is better” camp or the stock market camp, the key to financial success is to diversify, and manage your money in a way that works for you. Continue to save and invest, to help you build wealth and financial freedom over time.