In order to determine whether a person was better off investing in a home or the stock market at the end of the recession, Redfin partnered with FutureAdvisor to determine the performance of the median home purchase and financial portfolio in 24 metro areas. Redfin staffer Taylor Marr takes a look at the results, which reveal that in 20 of the 24 metros, the median financial portfolio had a higher rate of return from the measured period of January 2010 to May 2016.
Two important factors had an effect on home-price appreciation, property-type and timing:
Similar to how investors choose which sectors to buy company stock in, such as technology or health care, home buyers must choose what type of property to buy. One main difference, though, is that for financial investments, diversification of stock across sectors helps reduce risk, while maintaining high returns. Yet, without buying multiple homes across the country, a typical home buyer cannot diversify in this way.