Despite working in the institutional real estate industry for 20 years, I tend to agree with this article that stocks are better long term investments than real estate for most individuals. But to support their thesis, the author references Case Shiller Index and FHFA statistics on home price appreciation. These are predominantly single family indices, and while single family homes are often owned for investment (rental) purposes, primary residences should not be confused with investments. Your home is not an investment, it’s your home (i.e. shelter). Perhaps a better comparison would be the S&P index versus multi-family prices?
Now, I said above that stocks are better for most, but not all. Real estate is more time intensive and more capital intensive than stocks. But if you love hands on management and you have the capital, then real estate can be a rewarding investment, and fun. But it is definitely more involved than stocks. Another important point to remember. When investing in stocks, your initial investment can be your total investment, unless you decide to invest more. With real estate, your initial investment is not likely your total investment. Unlike stocks, with real estate you not only have your initial investment, but you are also responsible for ongoing operating expenses like taxes, insurance, and maintenance. While you hope the property will produce income to more than offset the expenses, there is no guarantee. If your building is empty with no income coming in, you still need to pay taxes, insurance, and any required maintenance. This brings me back to the initial premise that real estate is more capital intensive. If you plan to invest in real estate, be sure you have access to capital far beyond your initial investment because you may need it if things don’t go exactly according to plan.
Proverbial Living 