The U.S. real estate market continues to improve thanks to greater confidence in the housing market, and with the upward movement comes more cash flowing for investing in real estate. There are a number of different ways to get involved in real estate investments depending on what you, the investor, are looking for. It’s a highly customizable investment area that attracts investors from all walks of life.
For a deeper look at ways to delve into real estate investing, read, “Real Estate Investment Portfolio Diversity is Sound Strategy”
According to a recently released Gallup Poll, gold and stock investing have taken a backseat to real estate for a desirable long-term investment, but is real estate the money maker most investors are hoping for? Fortune writer Christopher Matthews says real estate may not be as lucrative as typically assumed, noting, “If one assumes ‘best’ [type of long-term investment] to mean the investment that offers the highest return, then Americans have things backwards. Real estate, on average actually returns very little when adjusted for inflation.”
Real estate, according to Gallup, is currently the preferred investment vehicle among men and women of all ages. However, income has a heavy influence on the types of investments people think will produce the best returns. While lower-income Americans (those making $35,000 or less annually), tend to put their faith in savings accounts and CDs, its wealthy Americans who prefer investing in real estate, stocks and mutual funds.
Writer Scott Trench of BiggerPockets.com, a blog about strategic real estate investing for “everyone” notes, “Real estate investing just might be a little easier than some people make it out to be… Real estate investing is certainly no picnic, but I find it hard to believe that this is a business where only 5% of folks can succeed. There are millions of landlords out there. And believe me, I’ve met some dummies in this business. Not everyone making money in real estate is some genius that knows something you don’t.” In short, lower incomes, and even lower education status don’t necessarily prevent individuals from investing in real estate.
Even so, while many people may be able to invest in real estate, many choose not to, or may not feel it’s a viable option for them in spite of the many avenues available to participate.
As an aside, Gallup survey also found that adults ages 18 to 34 are most likely to lean on savings accounts and CDs. Adults 55 and older favor stocks as the most sound investment. A 2016 poll also found that just 52% of Americans own stocks, an all-time low in 2 decades.
As of the 2017 Gallup survey, the West Coast has been most optimistic about real estate investments overall. According to Gallup, “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.”
Real estate is currently the preferred investment vehicle among men and women of all ages.
Could it be that that new cannabis laws in California (as well as previous laws legalizing cannabis in Colorado, Oregon and Washington) are contributing to this uptick in the West? It’s possible, as industrial warehouses are being heavily sought in this still-fresh market.
Americans may have favored investing in real estate as a way to diversify for 4 years running, but data show that the percentage of investors isn’t rising quickly, and may not necessarily rise significantly, despite its popularity. Why? No clear reason has emerged, but it may be, according to Gallup, indicative of some prudence in the remembrance of the Great Recession.
You may also like, “Interested in Real Estate Investing? Start Here“
With the collapse of the housing market in 2008-09, many potential buyers may be hesitant to make their cash vulnerable or illiquid while waiting out a recession. It could also be that areas ripe for real estate investments simply have more attraction for a particular investor’s interest. In the end, the ebb and flow of the real estate market makes it a good choice for investors who can “float” through the ups and downs of the market cycles and know when to exit and move on.
Sylvia Masuda is an associate editor for Financial Poise. A graduate of California State University, Fullerton, Sylvia has worked as an editor and designer for various print publications for almost 10 years.
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