Americans Still Favor Real Estate for Long-Term Investment
Monday, April 24th, 2017
Real estate remains Americans' top choice as the best long-term investment one can make, beating out stocks and mutual funds, gold, savings accounts and CDs, and bonds. This is the fourth straight year real estate has been the unrivaled favorite.
At 34% and 26%, respectively, mentions of real estate and stocks are much higher today than in 2011 and 2012, when both sectors of the economy were still recovering from the 2007-2009 recession, including sharp downturns in the housing and stock markets during that period. However, the current 34% choosing real estate represents a leveling off of preferences for this investment after they increased in most years from 2013 to 2016.
Meanwhile, mentions of gold and bonds are lower today than in 2011 and 2012. In 2011, gold ranked No. 1, mentioned by 34% of Americans as the best investment, and bonds were favored by 10% -- twice today's level. But as gold prices fell and the housing market and stocks recovered, perhaps making bonds less appealing, the public regained its confidence in real estate and stocks.
Americans' preference for traditional savings accounts and CDs has been consistently muted since 2011 -- understandable given that interest rates have been at or near historical lows during this period.
Residents of West Show Most Confidence in Real Estate
Residents of the West are more likely than adults living in other regions of the country to consider real estate the best long-term investment. Forty-six percent of respondents in the West identify it as the best investment option, versus 33% in the South, 32% in the East and 24% in the Midwest.
Not only have housing prices recovered the most in the West in recent years, but after experiencing the steepest downturn in housing prices during the recession, residents of the West may feel especially enthusiastic about recent improvements in their local housing market.
Additionally, there are several demographic differences in attitudes toward investments that conform with what Gallup reported last year:
Adults in households earning less than $35,000 per year are less likely than those in more affluent households to value real estate and stocks, but more likely to value savings accounts/CDs.
Younger adults (aged 18 to 34) are far more likely than older adults to name savings accounts/CDs as the best investment.
Adults 55 and older are more likely than younger adults to consider stocks the best investment.
Men (22%) are more likely than women (13%) to see gold as the best long-term investment.
|Real estate||Stocks/Mutual funds||Gold||Savings accounts/CDs||Bonds|
|$75,000 and over||38||35||13||7||5|
|$35,000 to $74,999||36||23||19||13||5|
|Less than $35,000||27||17||22||19||6|
|Gallup, April 5-9, 2017|
One reason more Americans don't mention stocks is that barely half of adults report owning any. Stock ownership is also strongly related to age, perhaps explaining why young people are not as confident as older adults are in stocks as a long-term investment.
Americans' perceptions of the best place to put their money for the long term are similar to 2016, but have shifted since 2011 in line with ups and downs in real estate, the stock market and gold prices.
After trailing gold in 2011, real estate worked its way up the rank-order of preferred investments and has led the list since 2014. Stocks have been alone in second place since 2015, with gold slipping to third.
Still, despite meaningful increases in housing prices and stock values over the past year, Americans' preferences for real estate and stocks have held fairly steady, possibly a sign of residual caution on consumers' part. As long as the economic shocks of the Great Recession remain a vivid memory, preferences for these may not swell much further.