Source: Fortune.com
Summary
The U.S. housing market has struggled since 2022 as mortgage rates rose, while the stock market, fueled by the AI boom, has seen strong gains. From 2015 to 2025, the S&P 500 outperformed the housing market, with home prices up 87% and the S&P 500 up 235%. Economists argue that the rent-versus-buy decision often combines living and investment choices, which can lead to misjudged returns. In 2026, home prices rose 1.5%, while the S&P 500 gained 13%. Sellers are now offering incentives to attract buyers, with 44.7% of sales including concessions, according to Redfin.
Our Reading
The numbers tell one story.
Home prices barely moved in 2026, while stocks surged.
Investors see housing as a laggard, not a safe bet.
Sellers are desperate, offering everything from appliances to cruises.
Buying a home is now more about getting a deal than building wealth.
Author: Evan Null
U.S. Homes vs. Stock Market
U.S. homes have underperformed compared to the stock market in recent years. The housing market has been stagnant since 2022, when the Federal Reserve began raising interest rates to control inflation. Mortgage rates have climbed above 7%, making home purchases more expensive. Meanwhile, the S&P 500 has seen double-digit gains, driven by the AI boom. This trend has led younger Americans to favor renting and investing in stocks over buying homes they may never afford.
Home Price Growth vs. Stock Market Gains
From 2015 to 2025, home prices increased by 87%, while the S&P 500 gained 235%. This gap has widened as mortgage rates have risen. The Case-Shiller Index shows a 1.5% increase in home prices in 2026, while the S&P 500 rose 13%. This performance has led economists to question the long-held belief that homeownership is the best way to build wealth.
Homeownership as a Mixed Decision
Buying a home combines two decisions: where to live and how to invest. Economists argue that this bundling can lead to poor financial choices. While homes provide a place to live and potential investment returns, they are also illiquid and undiversified. The tax code offers benefits to homeowners, but the returns are not always strong, especially when compared to the stock market.
Home Sellers Offering Incentives
The current buyer’s market has led to more concessions from sellers. Redfin reported that 44.7% of home sales included incentives, the highest for August since 2020. These concessions range from mortgage rate buy-downs to free appliances and even vacation packages. Some sellers are even lowering prices significantly to attract buyers, showing the pressure in the market.
Investors Focusing on Stocks Over Homes
Younger Americans are increasingly choosing to rent and invest in stocks rather than buy homes. This shift is due to the high cost of housing and the strong performance of the stock market. Economists suggest that the rent-versus-buy decision should be treated as two separate choices, not one. While homeownership has its benefits, the financial risks and lack of diversification make it a less attractive option for many investors.
