Why Will Real Estate Investing Outperform Stock Market

Stock Market vs Real estate

For the longest time, investors all over the world choose the stock market as the first point of destination of their hard-earned money. However, some signs are showing that the focus and interest has now shifted to real estate. With all the global uncertainties happening, people search instead for investment options that can give them a better sense of security.

Real Estate Investment Returns Based on History

The change didn’t really come as a surprise, particularly if you look at the reports of Forbes showing that real estate was able to outperform the stock market from years 2000 to 2016, with real estate yielding 10.71% annual return compared to the 5.43% of S&P 500.

It is also worthy to note that about 55% of today’s millennials show more interest in real estate investments. Next to the list of the groups that believe real estate was able to outperform the stock market ever since 2000 was mainly composed of the so-called Generation X or people aged 35 to 44 years old.

Real estate investments deliver outsized long-term returns.

While the stock market delivered exceptional total returns in excess of 25 percent last year, the recent correction has demonstrated how much volatility risk goes with that yield. Comparably, real estate investments averaged a total return of 7 percent last year, but without the whipsaw repricing experienced by Wall Street. Comparing the two asset classes over the long term demonstrates the advantages of real estate. An investment made 20 years ago, at the beginning of the year 2000, has delivered dramatically different results. The average total return on commercial real estate over this time has topped 359 percent while the stock market has delivered a 115 percent return. Even without considering the recent stock market correction, real estate outperformed. Attached special report from Marcus & Millicap

What’s the Truth Behind Real Estate Investments?

Why do most of the younger investors and millennials think of real estate investment to be a strong form off investment? Despite the markets experiencing tough times from 2007 to 2008, with real estate included, they were still able to witness the property values bouncing back just when the rest of the traditional investments are falling behind.

A study also found out that approximately 86% of millennial renters right now are planning to have their own house in the near future. It means that the not too distant future will be seeing around 50 million potential home buyers joining the housing market.

The Perks of Real Estate Investments

Being a secure and tangible investment you can see and touch, it is pretty obvious that real estate is safer unlike stock market in many ways as long as the property you purchase is something you can really afford and is on its road to growth and success.

Even though a bigger down payment is often a requirement in real estate investing, some forms of investment properties offer positive returns that make them enticing in the eyes of savvy buyers who know where to search for properties that produce income, including multi-family apartment buildings, retail locations, and vacation home rentals.

Online financial experts also had a significant effect on the increasing popularity of real estate or stock investments together with the fierce battle as to which of these two will bring you more money.

Below are the most common reasons why real estate investing is outperforming the stock market:

  1. Leverage
  2. Control
  3. A secure and tangible asset
  4. Tax benefits
  5. Pride of ownership
  6. Less volatility
  7. Market volatility protection


It doesn’t matter if you are a savvy investor or a newbie because one this is for sure: real estate is a sensible option for any investor looking for consistent returns and secure and steady growth. Thus, it is safe to say that real estate investing will continue being a safe form of investment in the near future provided that you are a wise buyer and look for income-producing properties within a growing area.



Related News

Arete Capital Group Announces Acquisition Rockville City Center in Rockville, Maryland
March 9, 2020
Maryland and Washington, DC-based Arete Capital Group continue to fulfill its mission of building client wealth with the group’s latest...

Contact an Originator

Our team of seasoned professionals is here to help you navigate the financial transactions that drive your success. Speak with us today to see how we can help.