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Redfin Study: Have Stocks or Housing Recovered More Since the Great Recession?

November 17 2016

SEATTLE — Nov. 14, 2016 — The typical stock portfolio offered a higher return on investment than the typical home from January 2010 to May 2016, according to Redfin, the next-generation real estate brokerage. In partnership with investment advisory firm FutureAdvisor, Redfin's latest analysis compared gains in median home prices with returns on a median stock portfolio in 24 major U.S. metro areas.

While there were slight variations, a median financial portfolio earned between 63 and 70 percent since 2010 in each of the 24 metros studied, offering a higher rate of return than the housing market in all but four metros. The exceptions were Miami (where home prices increased 73.3%) and three metros in Northern California: San Jose (74.7%), San Francisco (72.7%) and Oakland (67.6%). These were all housing markets where prices skyrocketed and crashed the most during the bubble years.

Other metros, such as Philadelphia (home prices up 11%) and Baltimore (11.4%), have had a more steady recovery. Their residents would have had a much higher return investing in stocks than in the housing market during this time. However, a great deal of value can be derived from a home purchase beyond its price appreciation.

"There are pros and cons to any investment, but real estate is unique in that it offers the advantage of forced savings through the monthly mortgage payment," said Redfin chief economist Nela Richardson. "The fact that homeowners build an increasing share of equity just by paying their mortgages every month enforces a savings discipline on consumers that is absent in stocks. For this reason, real estate historically has served as the primary engine of wealth creation, particularly for the middle class."

In most cities, multi-family buildings, condos and co-ops had higher appreciation than single-family homes. The best time to buy in 2010 was December, with home prices appreciating 46 percent since then, compared to just 36.8 percent for homes purchased in June of that year.

To read the full report, complete with additional data, visualizations and analysis, visit here.

About Redfin Corporation

Redfin is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer's favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the highly accurate automated home-value estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $31 billion in home sales and saved customers more than $335 million in fees through 2015.

For more information or to contact a local Redfin real estate agent, visit www.redfin.comwww.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center.

About FutureAdvisor

FutureAdvisor is an award-winning digital advisory firm based in San Francisco serving clients nationwide. With a focus on collaborating with major financial institutions, FutureAdvisor's technology helps firms provide financial advice digitally to their customers. Their software actively monitors and manages clients existing 401(k)s, IRAs and taxable accounts from a household-wide, long-term perspective. FutureAdvisor was awarded the World Economic Forum's Technology Pioneer award in 2015, and Euromoney's Best American Wealth Management Innovator award in 2014. They were acquired by BlackRock in October 2015 as part of BlackRock Solutions,® which offers risk management, advisory and enterprise investment system services to a broad base of institutional investors. For more information, visit www.futureadvisor.comwww.futureadvisor.com.