According to a study conducted by the Central Bank of San Francisco, the global residential real estate market has been the best long-term investment in modern history, having better returns than the stock market and with much less volatility and risk ("The Rate of Return on Everything ", 1870-1915, Federal Reserve Bank of San Francisco, 2017).
The study analyzed the returns of the stock market, bonds, sovereign bonds and real estate of 16 developed countries of the world between 1870 and 2015, becoming the most exhaustive study carried out to date.
In the long term, the residential market and the stock market had average returns close to 6%. However, the volatility of the average real estate market was 10% vs. 22% for the stock market.
On the other hand, the real estate market offered greater protection against inflation as the values of the real estate market tend to be more stable in both income and capital appreciation over time. In addition, there is a lower correlation of property prices between different countries, versus the stock market that is globalized.
In contrast, in the long term, the returns on sovereign bonds and investments considered very conservative have been between 1 and 3%, having negative returns in world wars and offering little protection against inflation and periods of low growth.
These results challenge the traditional belief that higher profitability is always associated with greater risk and redefines long-term investment strategies.
Real Estate Crowdfunding - steady, reliable yields for growing wealth
Steady, reliable yields – the key to growing wealth over time Why do we invest? The answer is simple – to make money. You might be saving for your children’s …
What are rental returns, and how do you calculate them?
Rental returns and real estate Rental returns are the returns delivered on a property. Rents offer a long-term, steady source of income and are important for investors looking to diversify …
Why invest in Philadelphia?
Rising rent in the US isn’t exactly a shocking revelation. In fact, we’ve been seeing a year-on-year increase since 1980. And now, with prices again hitting record levels, real estate …