Stock Market vs Real Estate: Investing in Stocks or Housing Market?

Just before the crisis of 2008 hit the market, the housing prices surged as many construction companies were entering debt in order to build homes at high prices that no one actually bought, thus causing these investors to go into foreclosure.

After the price spike in the housing market, there came price drops, indicating that the real estate market is set to crash once again. However, stock market doesn’t seem far off from the crash either, as the majority of financial analysts can agree that we are looking at another recession or at least economic depression.

Stock Market or Investing in Real Estate? Which One Makes a More Profitable Action?

In the last 27 years, based on the information available on Yahoo Finance, S&P 500 index and the Federal Housing Finance Agency, the stock market had showed better performance in oppose to the real estate market, however, these are entirely different investments by nature.

Stock market is definitely more volatile, and is definitely bringing higher returns than investing in real estate, but buying a house might stand as one of the biggest moves a person can make in their life.

Between 1991 and 2016, stock prices have definitely outperformed housing prices, growing at a far higher rate than real estate price and sales, which is why economists believe that the stock market is more likely to suffer a great deal in the supposedly upcoming recession.

Although the analysts can agree that the housing market is looking at a crash as well, many of them claim that casualties won’t be as grave as it would be the case with the stock market.

Answering the question whether is it better to invest in stocks or real estate may be a hard call because each of the investments is different from another and has its perks and downfalls.

Real estate for instance can be difficult to cash in on, while it also calls for maintenance costs alongside paying taxes, while stocks are representing a piece of a company that you are investing in and which tends to grow or drop in accordance with various factors such as market trends, company’s performance and economy.

However, in the upcoming period, investing in real estate is said to be a safer option.

Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.