Real Estate vs. The Stock Market

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August 25, 2016 by Jeff Lowen

An ongoing boxing match within the confines of both industries perhaps, but a recent national survey sponsored by BankRate has revealed some interesting facts.

With the recent record highs in the Standard & Poor’s 500 index and the Dow Jones, you might think Americans would feel excited about the future of the stock market. However, this remains in question according to BankRate. Home buying

Given the choice, put real estate first. Cash investments, savings, and CDs were second, and the stock market bouncing along in third place, and in a tie with gold and precious metals.

Don’t read too much into it, though.

The survey makes two very valid arguments…

  1. You need to have a very well-diversified portfolio that should include stocks, bonds, some alternatives and real estate. And,
  2. Houses are tangible. You can physically see and feel the product. So you know where your money is going: It’s going directly into that house. With stocks, you have no clue where your money is going.

The age old argument that with real estate, no matter what happens to the economy, you still have the house albeit true, it’s necessary to have the means to hold on to the house. Just ask the peeps from the fallout after the rush in the early 2000s.

The survey also doesn’t address whether that real estate is your own home, owner occupied, or if it’s a rental or income producing property. Of course, if it were referring heavily on the rental or income producing, I’d go out on a limb and say hands down, real estate is the best bet. Ever.

Where else can you have an asset as an investment where other people are paying your carrying costs? Kind of a no-brainer, huh?

Doesn’t bode well for renters, though. Many an article has proven that a homeowners’ net worth is 40-50 times that of your standard garden variety tenant. Coupled with the fact that most tenants don’t realize how easy it is to get into a home, along with the Median-Asking-Rentsavailability of down payment assistance programs and great financing options with low rates these days, too.

Will the election change all that? Only time will tell.

As an agent, looking for ways to help your clients buy a home for themselves and one to rent out; this would be where I would educate myself. Living in the home of their dreams and a rental property that will subsequently cover the cost of their child’s college tuition, for example. …And, what’s wrong with that?

Absolutely nothing!

 

To read the article directly from BankRate, click here.

 

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