A perception is spreading quickly among young adults in the United States that they should invest in stocks rather than buy a home. As high interest rates and soaring home prices make it harder to "buy a home," young people are turning their eyes to the stock market instead of real estate, the traditional vehicle for building wealth.
According to the Wall Street Journal (WSJ) on the 12th (local time), as access to the real estate market declines, young Americans are making a "mass migration" to the stock market. It is the opposite trend from the past, when U.S. household considered buying dwellings the main means of securing an asset. According to the National Association of Realtors (NAR), the homeownership rate among Generation Z (born 1997–2012) in the United States is around 16%, and the share of first-time homebuyers last year hit the lowest since 1995. This year, about 4.03 million dwellings are expected to change hands in the United States, a figure lower than in 2024.
With interest rates and real estate prices rising together, the dwellings market is freezing rapidly. According to the WSJ, the current average home price in the United States is about $400,000 (about 571.04 million won). If a buyer purchases dwellings with a loan at an interest rate in the mid-6.5% range, the monthly payment would soar to around $2,170 (about 3.1 million won). That is about 36% of the after-tax income of a median household earner, and adding property taxes, insurance premiums and various maintenance costs can easily push housing expenses above half of income.
By contrast, if you rent an apartment of similar size, the annual expense gap varies by region from $8,000 to $14,000, a disparity that is prompting younger generations to change their investment direction. In addition, with a slew of trading apps touting "zero commissions," including the mobile stock-trading platform Robinhood, the psychological distance to stock investing has narrowed, which is seen as driving younger investors to increase their stock transaction volume.
According to a JPMorgan Chase report, 37% of 25-year-olds last year had investment accounts, six times the share in 2015 (6%). The report said, "Due to structural problems in the dwellings market, savings are shifting from real estate to financial assets," and noted, "Stocks are being perceived as a more attractive or accessible investment destination than dwellings assets."
In fact, New York stocks have recently been on a tear, repeatedly setting record highs. On the 10th (local time), major New York indexes slumped after U.S. President Donald Trump signaled large tariff hikes against China, but up to that point, the Standard & Poor's (S&P) 500 and the tech-heavy Nasdaq had each set all-time highs, stoking investors' expectations.
However, when comparing real returns, the results of stock and real estate investments appear similar. For example, if you put $60,000 into buying stocks instead of dwellings and steadily invest the $13,500 saved annually from renting, assuming an average annual return of 9%, you could build about $354,000 in assets after 10 years. With the same expense, if you buy $400,000 dwellings at a 6.5% rate and home prices rise 4% a year, the value of the home would reach $592,000 after 10 years, and net worth would be about $305,000.
Jim Egan, a Morgan Stanley real estate strategist, said, "Because dwellings uses leverage through borrowing, it can generate a similar return even if home price appreciation is lower than the stock market."
The advantages of owning dwellings have not disappeared entirely. Homeowners receive capital gains tax exemptions of up to $250,000 for individuals and $500,000 for couples, can prepare for retirement without worrying about rent if they live long term, and also enjoy nonfinancial benefits such as housing stability and autonomy.
However, since buying dwellings is no longer seen as "the one and only ladder to wealth" as in the past, experts said the inflow of young people into the stock market is likely to continue for the time being. Egan predicted, "If home prices fall or rents surge in the future, the balance could shift again, but for now the fierce competition between the stock market and the real estate market will continue."