Real Estate Widens Lead as Best Investment

After the Great Recession severely diminished the housing and stock markets between 2007 and 2009, Americans were unsurprisingly hesitant to look at these institutions as reliable long-term investment options. However, fast forward to 2016 and people's faith in real estate has seen a remarkable resurgence! A new survey released by Gallup shows that real estate has widened its lead as the best choice for long-term investment, while other choices have shown either little change or, in the case of one shiny option, a large decline.

Conducted earlier this month, the Gallup Poll asked 1,015 American adults what they considered to be their top choice for "best long-term investment". As it has in each rendition of this poll since 2013, real estate emerged as the most-chosen answer among respondents, garnering 35% of the votes! Compare this number to the 19% reported in 2011, and the strong growth of confidence in housing is obvious.

Even more impressive than the raw number is the growing lead that real estate holds over second place, which has been stocks and mutual funds since 2014. Last year, the gap between the two choices was 6% (31% vs 25%), whereas this year it has grown to 13% (35% vs 22%)! After finding themselves in similar positions in 2011 (19% for real estate and 17% for stocks), real estate has shown the much more substantial recovery in confidence. In fact, real estate's poll numbers have increased between each of the last 5 years. Stocks had also seen steady, though somewhat lesser, growth until this year's dip, likely due to the rocky start to the year for the stock market.

In 2011, real estate was a distant second among those surveyed. Can you guess what the #1 choice was for long-term investing? GOLD! In that year, 34% of respondents chose the precious metal as their top option. This year, that number has fallen to 17%, with a trajectory that is almost a direct inverse of real estate's rise. A quick check of the price history shows why this is the case, with gold prices falling from $1,910 per ounce in August 2011 to $1,254 per ounce in April 2016. Meanwhile, the average sale price of a new U.S. home has risen from $259,300 to $348,900.

The poll also revealed some interesting deviations in investment strategies between subgroups of Americans. For instance, men were more likely than woman to select gold (22% vs 14%) as their top choice, while women were more likely to select savings (18% vs 12%) or bonds (8% vs 5%). Another difference is observed between age groups, with Americans under 30 being the least likely to choose real estate (26%) and the most likely to choose savings (26%). Finally, even renters appear to know the value of home ownership, with a similar amount of the group selecting real estate (32%) as did actual home owners (34%).

Source: More Americans Say Real Estate Is Best Long-Term Investment