Throughout the biggest part of the history of the US, at least the part that we can deem to have reliable information about, the real estate prices have increased not more than to the level of general development of inflation. Only during the period of 1990 through 2006, which period is known as the Great Moderation, the property profitability started competing with the stock market profitability. The stock market kept showing more growth and declines than the real estate market, yet it kept being more profitable. Any comparison between the relative stock market efficiency and the property prices efficiency shows, that the results will be different in different periods of time.

Why is real estate better than stock?

Each investment into property gives one full control over the situation. The owner is able to make improvements, cut expenses (e.g. decide on mortgage refinancing now, when the rates came down again to a record low), increase the rent, find better tenants or sell the property. The mortgage rates nowadays are record low.

Furthermore, it gives you additional guarantees. The credit leveraging on a growing market is a peculiar thing. Even if in a long-term perspective real estate will only face inflation, a 3% growth in real estate means 15% return on investment on the background of a 20% drop in the real estate prices. It is these criteria that make real estate investments much more popular compared to stock.

Stock vs real estate