Is real estate still a good investment?

A colorful oasis in the middle of Las Vegas

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  May 27, 2023 • Issue #94 Happy Saturday! This week we’re talking about whether homeownership is still a good strategy for building wealth, buyers and sellers finding common ground in a tough housing market and a Las Vegas home that hides its true colors.

Is buying a house still a good investment?

Eddie Lee / Money; Getty images Real estate has traditionally been considered a good long-term investment. Home values tend to appreciate over time, so the longer you hold onto a house, the more likely you are to gain a significant amount of wealth. The pandemic helped push those gains to new heights. Home prices increased by as much as 20% thanks to high buyer demand and low inventory levels. Homeowners amassed an average of $300,000 in equity, a record high, during the second quarter of 2022. According to a recent Gallup poll, homeownership is still considered the best long-term investment, ahead of stocks and mutual bonds. But, as Money reporter Brenden Rearick recently wrote, the perception of real estate as a “good investment” ebbs and flows depending on the year. The survey results show that 34% of respondents believe owning a home is a good long-term investment, within the pre-pandemic range of 30% to 35%. In 2022, however, home prices reached all-time highs, temporarily boosting survey respondents' view of the housing market. A record high 45% of respondents thought real estate was the best long-term investment that year. Stocks slipped into third place this year with only 18% of respondents believing it’s the best investment. Gold, on the other hand, moved to second place; 26% of respondents think the precious metal is the wisest choice. Money Movers, I’m running another very informal poll. Do you think a home is still the best place to park your money and watch it grow? Or do you prefer another form of investment? Let me know at leslie@money.com.

For more on what’s happening in the housing market: Stocks, Real Estate or Gold? Here’s What People Think The Best Investment Is Now

For more on what’s happening in the housing market: Priced Out of Your City? New Research shows Where You Can find Affordable Suburbs

What makes home sellers happy

Getty Images Since the start of the pandemic, trying to buy a house has looked more like a Wild West shootout than a financial transaction. From 2020 to 2022, homes sold for thousands (sometimes hundreds of thousands) above asking price. With ultra low mortgage rates making those high offers a lot more affordable,  buyers had to be quick to the draw with their bids — or face being run out of town. This year was supposed to be a return to “normal.” But according to a recent survey by digital real estate platform Opendoor, buyers and sellers are still duking it out in many cities. Case in point: 73% of buyers plan to bid below the asking price in 2023, while 36% of sellers expect to sell for over the asking price. (Definitely not seeing eye-to-eye there.) Amid the confusion on how much homes are worth this year, buyers and sellers do agree that mortgage rates are a problem, competition is stiff and homes cost way too much. They also agree that flexibility is key when it comes to negotiating. After all, there are still plenty of people buying and selling homes right now, Amit Arora, vice president of investments at Opendoor, told me last week. Happily, many buyers and sellers are also on the same page regarding concessions they’re willing to make. Like: A flexible closing date — 69% of sellers and 75% of buyers are willing to compromise on this point. Negotiating on the asking price — 41% of sellers are willing to reduce the price and 27% of buyers are prepared to increase their bid. Paying inspection costs — 42% of sellers and 53% of buyers are willing to pay for home inspections. “It’s not all doom and gloom for buyers,” Arora says.

For more on what’s happening in the housing market: 14 Million Homeowners Took Advantage of This Smart Move During the Pandemic

Listing of the week

Brian Mannasmith What’s hiding behind those walls? If you judge this Las Vegas, Nevada, home by its exterior alone, you’re making a big (beige) mistake. The home, listed by Jordon Metz of the Ellen Fahr Group, hides interior walls covered in a colorful collection of anime, graffiti and comic book art. The murals are a street art lover’s paradise, and feature original work by contemporary artists like Juan Muniz, Tiki Jay One and Pretty Done. Even the stairs are coated in graffiti. The loft-style home also features 3 bedrooms, 2 baths, an upscale kitchen and floor to ceiling windows that look out onto the back yard. If you’re tired after a long day’s work, you can recover by lounging in the Jacuzzi (one of the only graffiti-free fixtures on the property). The house is listed for $995,000 and is still on the market at the time of this writing. It’s located in a gated community within a short distance of the Las Vegas Strip, the airport and the Raiders football stadium. Brian Mannasmith

‘Til next time, P.S. Have you seen a cool listing on social media or have a question about housing or mortgages you desperately want answered? Let me know on twitter at @LeslieLCook, or via email at leslie@money.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.

Money’s Essential Home Buying Resources: Spring 2023

On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance CompaniesMortgage Refinance Calculator or these refi tips. Key question: How much house can I afford?

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