Every year, Gallup conducts a poll to find out which long-term investments Americans favor the most. And once again, real estate is the top choice in 2021. This year, 41 percent of Americans think real estate is the best long-term investment, beating out stocks, gold, savings accounts, and bonds. In fact, this number is up by six percent over 2020, when just 35 percent of Americans chose real estate as their favorite investment. But why does real estate remain so favorable to Americans looking to grow their wealth? Let’s take a closer look.
It acts as a savings program
When you purchase a home with a mortgage, over time you will pay off that loan. This increases your cash flow, especially down the line. If you’re looking for an investment to fund your retirement, real estate is an excellent choice. It’s like having a forced savings account.
It can be improved
Real estate is an investment that can be improved, thus increasing its value. You can make upgrades to the landscaping, build an addition to the home, or make any number of cosmetic changes that improve its appearance and functionality. You can make these improvements yourself if you enjoy DIY, or you can hire professionals. Either way, those improvements can provide a solid return on your investment.
It has better returns than stocks
One key reason that real estate remains American’s top choice is that it is less risky than the stock market. There are variables controlling the stock market that can make your investments riskier, especially when the market is volatile. While the real estate market can experience ups and downs and the occasional bubble, the longer you hold on to your property the more valuable it becomes. You can also leverage your real estate holdings to explore other revenue streams.
It’s a tangible asset
When something is tangible, it feels more real. Real estate is a tangible asset — it’s something you can touch. That property you own will always have value. Other investments, like stocks, are not tangible assets and their value can be reduced to zero at any time.
It appreciates over time
If history has taught us anything, then it’s that real estate always appreciates over time. The longer you own a property, the more wealth you can create. If you’re able to weather short-terms changes in the real estate market, then you can capitalize on your investment when the market swings in your favor.
The market is thriving in 2021
Finally, even more Americans have proclaimed real estate their top investment in 2021 because the market is thriving. While many sectors of the economy suffered during the pandemic, real estate has remained strong. And while some may worry that we’re headed for another housing bubble, there are key differences between our current market and that which prompted the Great Recession. Many experts agree that today’s real estate market is both strong and sustainable, driven by supply and demand and tempered by tight lending practices.