Americans’ views of real estate as the best long-term investment are declining as the housing market cools from its pandemic-era peak last summer, according to a new poll.
Slightly more than one-third of Americans polled by Gallup chose real estate as the best long-term investment option this year. And although this is on par with a typical year, it marks a sharp drop from a record high in 2022, when 45 percent chose it as the best long-term option.
Gallup noted that real estate views are not tethered to homeownership because renters and owners are statistically as likely to say it is the best investment.
The housing market has cooled rapidly amid the Federal Reserve’s fight with inflation that led the central bank to increase interest rates 10 times.
During that time, mortgage rates more than doubled from lows of around 3 percent to a high of 7.08 percent in November. This pushed monthly housing payments to new heights.
Yet, the consumer price index (CPI), a key measure of inflation the Labor Department released Wednesday, showed inflation slowed in April to the lowest annual rate since 2021.
Shelter costs, which make up about 40 percent of core inflation, rose by 0.4 percent in April, the CPI showed. It was also the largest contributor to the monthly increase in overall inflation.
The cost for shelter has increased by 8.1 percent in the past 12 months on an unadjusted basis.
But the inflation slowdown in April could give the Fed room to pause rate hikes, which could offer relief to prospective buyers.
While views of real estate investment declined, there was a rise in Americans’ perceptions of gold, savings accounts and bonds as long-term investment options.
Perceptions of gold as a long-term investment jumped by 11 percent from a year ago to 26 percent.
Gallup’s poll results are based on telephone interviews conducted from April 3-25 with a random sample of 1,013 adults living in all 50 states and Washington, D.C.