Housing Lagged the S&P 500 Over 40 Years, WSJ Analysis Finds
A WSJ analysis finds that after taxes, the S&P 500 beat buying a pricier home over 40 years, even in the best-performing U.S. metro areas.
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what happened
Writing in the Wall Street Journal, Derek Horstmeyer and his research assistants compared two options: spending extra money on a bigger house or investing it in the S&P 500. The analysis uses Federal Housing Finance Agency price data from 1985, with a 20% down payment, a variable-rate mortgage, taxes, and a sale at the end of 2025.
The conclusion is that even the strongest local housing markets trailed stocks. The top five metro areas, led by Seattle at 6.22% a year, all fell short of the S&P 500's average annual return of 7.57%. The weakest performers included St. Louis at 3.88% and Houston at 4.04%.
The S&P 500 was also more volatile, at 16.5% a year versus 9% for housing, but its higher return still won. The authors note that a home has value as a place to live, even if it is a weaker investment.
why it matters
For investors, the study is a reminder that rising home prices do not automatically mean better long-term returns than equities. It is an analytical study, not investment advice.
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sources
- Your House vs. the Stock Market: Which Has Been a Better Investment? — WSJ, 5 November 2026 at 20:00 UTC
prepared by the newsmetry newsroom with ai assistance from the sources listed below. not investment advice.
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