Real estate is holding strong among Americans who see it as the best way to invest. This marks the fifth year in a row that real estate has taken the number one spot in a Gallup poll on investing preferences. (1) It was conducted in early April, after the recent COVID-19 stock market sell-off.
It’s no secret that I’d choose real estate over stocks, but this poll shows that many other Americans feel the same way. Of the pollees, 35% chose real estate as their preferred method of investment while 21% chose the stock market. That’s a bigger gap than last year. Stocks lost six percentage points, while real estate held on to 35. Gold and bonds both trail stocks but they took points away from stocks as people put more emphasis on those options.
Real Estate Top Investment Choice
Real estate has been named the top investment choice since 2013. It rose from 25% back then and has been hovering around 34% to 35% for the last five years. The latest stock market sell-off drove many people away from stocks, and for the time being, into cash, CDs, or gold. Seventeen percent are putting their money into savings accounts or CDs while 16% are choosing gold. Only 8% picked bonds.
Stocks have typically been a top choice among wealthier individuals, but the percentage of high-income folks who choose stocks tumbled from 40% in 2019 to 31% now. Low income investors are the least likely to choose stocks, and many more felt that way for this poll. The percentage of low-income investors fell from 21% to 12%. Middle-income earners had about the same percentage of stock supporters. That number dipped from 26% to 25%.
Stocks still have a big stake in the American portfolio, however. The survey shows that 55% of Americans still own some stocks. That’s down from a peak of 63% before the Great Recession. It’s also just three percentage points higher than a previous low in 2013.
Investment Opportunity During the Pandemic
The housing market also crashed back then. The foreclosure crisis led to an increased demand for rentals, and with dirt cheap prices on homes, it was easy for investors with cash or credit to become landlords. This time around, the housing market is more stable and real estate experts are not predicting another foreclosure crisis, but rental demand is still there and buying now could give you some advantages.
For one, you may find a few deals out there. With one in five Americans out of work, there’s bound to be some motivated sellers. You may also have fewer inspection and appraisal hoops to jump through to get the deal closed, but it could be harder to find a loan. When it comes to finding your tenants, landlords and property managers will be able to determine whether an applicant has job security during this crisis.
Many real estate pros expect a surge in real estate sales once the pandemic danger is over. If you are in the market for a rental property, you might not want to wait until those floodgates open. We have an article on our website about buying rental properties in the midst of the COVID-19 pandemic.
(1) Gallup Poll