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What is the best investment, ownership of a house or stocks? If you ask the majority of Americans, they would probably choose the former.
A recent report of the Federal Reserve Bank of New York looked into customer expectations for homeowners and the way in which they have modified their behaviors since the COVID 19 pandemic. Survey participants were asked to assess which was the best investment – a residential or financial assets such as stocks – and what considerations were involved in their decision.
The research concluded that over 90% of respondents opted to buy their primary residence rather than to participate in the equity market. A plurality of survey participants have favoured the possibility of owning stocks, with over 50 percent of the households involved opting to buy a rental home.
The most common motives for preferring housing from stocks tended to be convenience and affordability, rather than a better yield. Home was their "desired living space," "provides security," and house values "are less unpredictable." The most frequently chosen answers were.
Research has shown that residential property in most bear markets has become a good buffer even in the Great Recession. In the early days of the pandemic, the S&P 500 index lost about 20 percent in the first year, while the national home price index Case-Shiller rose by 1.4 percent. Of note, the equity market has since stabilized.
In 2021, Americans were more likely to mention higher housing revenues than in the previous year, perhaps reflecting the unbelievably quick rate of national price appreciation.
The researchers find however that people's views towards the housing sector have changed over the period of the pandemic. "The house preference fell in October 2020 and by February 2021 returned to the pre-COVID era," the writers of the study observed.
This change in housing tastes was not motivated by house price considerations. Some Americans showed more anxiety about the chance of vacancy, although worries about the possibility of paying mortgages may have affected the preference of citizens to homeownership.
The tendency of people to own a home may also represent their gender or schooling. Women preferred housing more than adults, and graduates of non-college opted for home ownership more frequently than graduates.