Investing in Real Estate or The Stock Market
(Reference: Jonathon Lansner column in Orange County Register, April 13, 2025)
I have often used Mr. Lansner’s columns to help explain the real estate market. I particularly enjoyed this column, especially what it did (and did not) say.
Since 1975, the Standard and Poor 500 Stock Index(S&P 500) has increased 10.2% per year, while the value of California’s homes has increased 7.0% per year.
On the surface, that might lead you to consider that Stocks might be the better investment. However, there is much more to the story.
Consider the following:
- Real Estate prices tend to go up in all markets. In the last 12 months, the S&P 500 has actually dropped below where it was one year ago. During that same period, real estate values have increased about 5%. The Stock Market is more volatile
- We rarely purchase real estate for cash. In fact, it’s common to buy real estate for investment with as little as 20% down, or even less. So, when that property goes up in value by 5%, the return on your invested dollars is 5 times that amount, or 25%.
- Most real estate is rented, resulting in additional income
- There are ongoing tax benefits to owning real estate.
- The monthly payment reduces your loan amount, adding to the value of your investment.
There is definitely good reason to consider stocks as a part of your investment portfolio, but you should also consider real estate. Let’s discuss. You can reach us at 949-500-6365 (phone or text), Frank@FrankDiLauro.com, or our website www.FrankDiLauro.com
