A Summary: Zillow Talk – Chapter 1: Stocks or Real Estate?

(Please see a summary of the previous chapter in Zillow Talk: Introduction)

In the first chapter, Spencer Rascoff argues that overall, investment in the real estate provides better return than stocks and unlike stocks, gives you a place to live. He indicates that as people pay their mortgage, they put equity in their houses. Owner can rent a house for income similar to dividend income, or can ask for loan to purchase a house, and of course deduct mortgage interest from their taxes. He then offers data and reasons to prove that return on investment is higher, while volatility is lower in the real estate market compared to stocks market. Furthermore, he reminds us that the real estate was resilient enough to resurrect from the crash of 2008.

I would like to add my personal opinion on the matter. I have invested in both stocks and real estate, and have read several books about different investment strategies in the stock market. I have also analyzed risk and return on investments in real estate as well as stock market; Based on all I have learned, I personally do not necessarily agree that real estate investment is more rewarding or less risky. Risk is an inherent part of any kind of investment. However, I strongly believe that for an average investor who can not analyze the value of stocks with acceptable accuracy, hence cannot weigh the risk of investment in the stock market, real estate investment would be a safer choice. After purchasing a house, any excess income (after mortgage is paid) may be saved in form of stocks or other.