During hard times like these, people should be wiser when putting their money on investments. Each investment that will serve as a secondary income should be something stable and never goes out of trend.
Two of the most popular form of investment would be real estate and stocks. Both sectors have a proven track record in providing an excellent investment return and never go out of trend even after decades.
But putting your money on real estate and stocks also has its respective pros and cons. A recent study shows that Americans prefer investing their hard-earned money in real estate property overstocks.
In the research conducted by the Federal Reserve Bank of New York, respondents answer the question, which would be a better investment, a home, or financial asset like stocks? The study also examined how the consumers' attitude towards investment has changed due to the COVID-19 pandemic.
Homes Over Stocks
The study finds out that the majority or at least 90% of the respondents prefer owning a primary residence over investing in the stock market. Interestingly, more than 50% of the participants also prefer owning a rental property to purchasing stocks.
It only shows how Americans are getting more optimistic about housing. Most of the respondents said that they prefer real estate over stocks due to higher returns and lower inconsistencies in demand.
However, the study also found out that Americans' attitude towards putting their money through investments has changed over time, especially after the coronavirus health crisis.
One interesting pattern is that the preference for housing dipped in October 2020 and returned back to the pre-COVID level by February 2021," the study reads.
The research author finds out several factors affecting the shift in investment attitude. For rental properties, the main concern was the risk of having vacant units. The pandemic has brought tenants back to their respective homes as the coronavirus prevented employees from working in-office setting.
For buying a primary residence, respondents are worried about the value and stability provided by the previous owner due to COVID-19. They are also concern about making a mortgage payment to affect people's preference toward homeownership.
Beyond Financial Benefit
People betting their money on real estate is not all about the financial benefit; many respondents also said they prefer housing over stocks. They believe a property offers more stability and comfort.
Other cited reasons include "desired living environment," "provides stability," and "less volatile."
True enough, the stock market was more unpredictable at the height of the coronavirus pandemic. While the real estate market has also experienced a low blow during the health crisis, some sectors blossomed, including the industrial real estate sector.
For example, in New York City, the industrial sites had an unexpected growth while COVID-19 cases continue to increase in the United States. The sudden demand for industrial spaces was brought by the influx of packages being delivered as people stay at home and uses online shopping more than ever.
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