Survey shows real estate still Americans’ choice of favourite long-term investment. Is it yours?

Real estate remains America’s favourite long-term investment in 2022, according to a just-released Bankrate survey. Would it be the same here?

Residz Team 3 min read

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Australia’s housing market is cooling, but the U.S. has “moved into a housing recession” according to Fortune Magazine.

Rising interest rates, surging inflation, and talk of a wider recession are dampening buyer enthusiasm, as both the Federal Reserve in the U.S. and the Reserve Bank of Australia try to cool the housing market to stem rising inflation.

Yet, on paper at least, real estate remains America’s favourite long-term investment in 2022, according to a just-released Bankrate survey. Would it be the same here?

Preference for real estate remains high

Bankrate surveyed 1,025 American adults from June 17-20 about their investment preferences for the long term. It was the third time in the last four years that real estate took the top honors.

“Despite a housing market that is coming off the boil, preference for real estate remains high,” says Greg McBride, CFA, Bankrate chief financial analyst. “For the third time in the past four years and sixth time in the past 10 years, real estate is Americans’ preferred way to invest money not needed for more than 10 years. Despite a brutal bear market in 2022, the stock market was a close second.”

What would you choose?

Before we share the full results of the survey, how would you choose to invest money you didn’t need for 10 years? If asked today, which of the following options offered by the survey appeal as a long term investment?

  • Stock market
  • Real estate
  • Bonds
  • Cash investments (savings, CDs)
  • Bitcoin/cryptocurrency
  • Gold or other precious metals
  • None of these

Survey results show interesting trends

29% of Americans surveyed said that real estate was their top pick for investing money that they didn’t need for 10 or more years. As we said, they’ve picked ‘real estate’ as their top choice in 3 of the last 4 years.

Here’s how they voted overall:

While the preference for stocks was up on last year’s result (26% vs 16%), cash wasn’t as widely preferred as it was last year, falling from 25% last year to only 17% this year.

“Preference for cash moderated notably, cited by just 17 percent of respondents, the lowest in a decade’s worth of polls,” says Bankrate’s Greg McBride. “Nothing like the highest inflation in more than 40 years to remind investors of the need to earn higher returns to grow the buying power of a nest egg.”

Survey shows three-quarters aren’t comfortable with crypto

Cryptocurrency also fell from 9% to 6%, with 75% of respondents saying they were “not too comfortable” or “not at all comfortable” with this investment choice compared to 61% reporting discomfort in last year’s figures.

Stage of life a factor in investment choice

The survey clearly shows the stage you’re at in life plays a major role in how you’d invest your money for the long-term.

Of all generations, millennials had the strongest preference (33%) for investing in real estate for money not needed in the next decade or more and Gen Z and Gen X also preferred real estate above other options. In contrast, baby boomers preferred the stock market (33%) to real estate (25%). The boomers’ preference for stocks exceeded that of all other generations, says Bankrate.

Will pressure to buy a family home keep prices stable here?

There are still a lot of potential buyers of real estate in Australia.

According to the Australian Bureau of Statistics 2021 Census, the number of millennials (25 y.o to 39 y.o) is almost as high as the number of baby boomers (55 y.o. to 74 y.o.) and NCA NewsWire’s Ellen Ransley points out they are the largest generational groups in Australia.

“There are around 5.4 million people within each age group, with only 5662 more boomers than millennials,” she writes in her article Census 2021: Housing stock dries up, millennials overtaking baby boomers.

With millennials starting their families, many will be desperate to secure themselves a stable home.

We know home buyers are being boxed in between rising interest rates and rising rents. Yet given the “Sophie’s choice” of paying high interest rates or shockingly high rents in Australia, millennials and Gen Z may take big risks to find a lender who’ll help them buy a secure home for their family, and any preference on paper and in surveys to buy real estate as a long term investment could become their reality.

Will that be a good long-term investment? Only time will tell but as we were saying before interest rates rose and prices cooled, time in the market is more important than timing the market.

If you’re considering purchasing or renting a house, make sure you download our free property report for that address. We have 12 million addresses in our database, with every report offering information on internet speeds, crime trends, bushfire and flood risks, investability scores and a whole lot more.

Photo by Jonathan Meyer on Unsplash