Sentiment is down, does that mean the prospect of higher returns is up?
According to a recent Gallup poll, real estate remains a top investment choice for Americans, although its popularity has decreased to a five-year low. In April, 34% of respondents selected real estate as the best place to invest their money, out of options including stocks, bonds, gold, and savings accounts. This poll has consistently ranked real estate as the preferred investment for the past decade.
However, the popularity of real estate as an investment has declined significantly. Last year’s record high of 45% has dropped to its lowest level since 2018. This decline in sentiment aligns with challenging conditions in the property industry, such as expensive financing, weak pricing, and overall economic uncertainty.
Despite rising mortgage rates, U.S. home prices have increased by 5% in the past year and have risen by 40% during the pandemic era, according to Zillow. Although real estate’s popularity has declined according to this poll, it remains a longstanding favorite.
Interestingly, shifts in investor sentiment often foreshadow future performance. Historically, when investors have held negative views on real estate, it has tended to perform better in the following year.