Gold vs Real EstateAs I write this post I listen to a radio ad touting gold’s virtues.  Today, the stock market dropped more than 600 points while gold reached a new high of $1,721 before settling at $1,713 an ounce.  Having gained more than $60 an ounce, gold certainly did prove virtuous today. So here’s a good question; how does gold stack up to Real Estate in today’s market?

Considering the old saying  “those who do not study history are condemned to re live it” I have compiled a little historical information:

Sample Investment Period; 1980 through today.

  • Gold’s Nominal return for the period is 95.5% with an inflation corrected “Real* return of -30.2%*
  • Housing’s Nominal return for the period is 252% with a an inflation corrected “Real* return of 18.6%*

Now, add in the tax and income benefits that  Real Estate enjoys and consider the fact that gold is already at an all time high price while Real Estate has yet to recover from the economy’s collapse.

The fact that income Real Estate does not have to increase in value in order to offer a nice return gives it a nice advantage. Both are tangible assets and as such they have proven to be great inflationary hedges.  Gold you can acquire and hide in storage while Real Estate does require someone’s management and does require upkeep.

Institutional money is finding it’s way back into the real estate market with REITS, Pension Funds, and other Investment funds swallowing up property and Real Estate Paper. Last year more than $375M was raised in Oregon by investment funds. Whether Real Estate is right for you is up to you though historically it has quite a track record!

*Source: Stewart Title