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Making the Smartest Investment Bet

Is investment in real estate a better bet compared to stocks? Many Gen-Xers and older millennials, would tend to opt for the latter, according to a survey by Redfin [1].

The survey [2], which was conducted between November 2 and December 10, 2018, and covered more than 2,600 respondents, revealed that less than half of homebuyers and sellers between the ages of 35 and 44 believed that real estate was a better long-term investment.

Explaining this group's propensity to lean towards stocks, the survey revealed that most of these respondents consist of those who reached the median first-time buyer age of 31 years old between 2008 and 2012 during the Great Recession and the housing market collapse.

“The oldest Millennials and youngest Gen-Xers entered their late twenties or early thirties during the housing crash, which explains why they are more skeptical about investing in real estate,” said Daryl Fairweather, Chief Economist at Redfin. “This generation experienced a major setback during the housing bust, which hit just as they were most likely to be getting married, starting a family, and becoming a first-time homeowner."

Younger millennials, the survey revealed, were much more confident about investing in the housing market with 59 percent of those aged 25 years and less opting for this investment over stocks. For older Gen Xers too, housing was a much better investment option compared to the stock market, with 60 percent respondents in this age-group preferring real estate investments.

Younger Baby Boomers, (55 to 64 years), were the most optimistic about real estate as an investment. Those in this age group preferred housing with 62 percent saying they would opt for property investment compared with 38 percent who said they would invest in stocks.

"Looking into the future, we expect to see homeownership increase as millennials enter prime homebuying age," Fairweather said. This is because millennials have a more favorable opinion of real estate as an investment than Gen-Xers, and millennials are a larger group than Gen-Xers."