The house vs stocks debate has a clear winner over the past decade, and it is not the house. From December 2015 through December 2025, the Case-Shiller Index of home prices rose 87 percent, while the S&P 500 climbed 235 percent, and that figure excludes dividends, which would push the stock market’s lead higher still.
The house vs stocks comparison has drawn fresh attention as mortgage rates climb back above 7 percent and the housing market stays largely frozen. Two economists argue in a Wall Street Journal op-ed that the house vs stocks split should challenge long-held views of homeownership, and that many Americans are bundling two different decisions into one.
“The rent-versus-buy decision involves real trade-offs that too often go unrecognized, especially by those who can comfortably afford to buy,” wrote Ray Fisman, an economist at Boston University, and Michael Luca, an economist at Carnegie Mellon University. “Buying a home also bundles two very important, but very different, decisions: where to live, and how to invest a large chunk of your life savings.”
House vs stocks over the past decade
The gap opened up because the two markets moved in opposite directions after 2022. The housing market has been largely frozen since the COVID-era boom ended that year, when the Federal Reserve began an aggressive campaign of interest rate rises to rein in inflation. The Fed is now tightening policy again, and the average 30-year fixed mortgage rate is back above 7 percent.
Stocks went the other way on the artificial intelligence boom, with the S&P 500 posting double-digit annual gains not seen since the late 1990s. The gap has kept widening in 2026. The latest Case-Shiller data shows home prices up 1.5 percent nationwide this year, while the S&P 500 is up 13 percent, despite the Iran war and fears of an AI downturn sending stocks on a wild ride.
Faced with high mortgage rates and high prices, some Americans are choosing to rent and invest in stocks instead of saving for a down payment. Over the past decade, that choice has worked out well.
Why the house vs stocks gap widened
The house vs stocks gap is not only about prices. Borrowing changes how homeowners see their gains. By financing most of the purchase price while putting only a small amount down in equity, any rise in value magnifies the return on the money actually invested. A 20 percent down payment on a house that rises by 10 percent in value produces a 50 percent return on the buyer’s original equity, Fisman and Luca noted.
The same maths works in reverse: a fall in prices has outsized effects on a leveraged purchase, and a home is a single, illiquid, undiversified asset.
Fisman and Luca acknowledged the limits: a home provides a place to live as well as an investment return, and the United States tax system offers benefits to homeowners. Even when home prices have seen strong gains, they wrote, “the returns to buying can be, well, meh.”
Sellers are feeling the strain. They offered concessions in 44.7 percent of home sales in August, according to Redfin, up 2.1 percentage points from a year earlier and the highest share recorded for that month since at least 2020.
The leverage trap in home buying
The longer record tells a more even story in the house vs stocks debate. A study of 16 advanced economies from 1870 to 2015, “The Rate of Return on Everything,” by Oscar Jorda, Katharina Knoll, Dmitry Kuvshinov, Moritz Schularick and Alan M. Taylor, published in the Quarterly Journal of Economics in 2019, found real total returns on housing and on equities roughly on par with each other, at about 7 percent per year on average. The figure combines price changes and rental income, before the many costs that an individual owner bears.
United States data points the same way. Using Robert Shiller’s home price series, which goes back to 1890, Ben Carlson of A Wealth of Common Sense calculated that real home prices rose only about 13 percent in total between 1890 and 1996, roughly 0.1 percent per year after inflation.
For renters, the house vs stocks question is practical. Renting and investing the difference requires discipline, and it means accepting that a landlord can raise the rent or sell the property.
Fisman and Luca put the point plainly: “Where you want to live need not be where you want to invest.” The house vs stocks numbers say stocks won the past decade by a wide margin. The longer record says the house vs stocks contest has been closer than the last ten years suggest, and the choice depends on whether the buyer wants a home, an investment, or both at once.