Apparently all is forgiven and forgotten and Americans are again embracing real estate as more than just shelter. For the second year in a row a Gallup telephone survey conducted in April found Americans think it is the best kind of long-term investment.
Investing in real estate outstripped stocks, gold, traditional savings instruments and bonds with 31 percent of survey respondents preferring it. Stocks and mutual funds were second at 25 percent. "A return of Americans' confidence in real estate and stocks as solid long-term investments was first evident a year ago, paralleling real world improvements in these areas," Gallup said. "Their continued strength this year indicates that was no fluke."
Real estate took a pounding in home values and consumer confidence during the subprime mortgage collapse and the subsequent housing crisis and recession. Gold gained appeal during this time, likely due to its tangible quality, but this has proved to be temporary.
Gold dropped to third this year as a choice for maintaining or growing wealth, declining by 5 percentage points to around an 18 percent preference. This was a significant change, Gallup said, from 2011 and 2012 when it was the runaway leader. Preference for gold has lost about 15 percentage points in the survey results since 2011.
Savings accounts and certificates of deposit (CDs) and bonds consistently have been lower on the list, although those identifying savings accounts as the best investment reached 19% in 2012 -- comparable to stocks and real estate at the time -- possibly reflecting Americans' greater desire for stability and security in the first few years after the 2008-2009 financial crisis. This figure has since stabilized near 15%. The percentage choosing bonds has only decreased since Gallup's baseline measure in 2011.
The two top choices in the survey were relatively unchanged from the previous year after three years in which real estate and stocks increased in popularity while gold waned. While this trend originates in 2011, an earlier version of the Gallup question that did not include gold shows significant shifts in preference for real estate and stocks between July 2002 and April 2007. During that period preference for real estate fell from 50 percent amid the housing boom to 37% when values began to drop. During the same period stocks increased from 18 to 31 percent. Then both dropped 2008 and 2009 as the housing and equity markets suffered severe losses.
When data is analyzed by various sub-groups real estate remains either the top choice or tied at the top among all major gender, age and income groups. Stocks faced more competition for second place from gold and savings accounts among some groups.
In particular, and mirroring a pattern seen in the past, nearly as many women, and particularly women aged 18 to 49 years, prefer savings accounts/CDs as prefer stocks. And, savings accounts ranks a clear second among the lowest income group, those earning less than $30,000 annually.