23% of Americans think real estate is the best way

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Real Estate

When it comes to building wealth, Americans say one thing and do another.

When asked the best way to build personal wealth, 23% of adults said investing in real estate, according to the recent CNBC Make It: You Money survey. That makes it the most popular would-be wealth building method, ahead of investing in stocks (16%), starting your own business (15%) and getting a second job or side hustle (12%).

But that’s not what those looking to increase their wealth actually did this year. In 2022, the No. 1 action Americans took to build wealth, stated by 27% of respondents, was investing in the stock market. Just 12% invested in real estate.

Why real estate is more popular than stocks in theory, but not in practice

So what’s keeping Americans from investing the way they want? The biggest factor, financial experts say, is cost.

“In real estate, it takes money to make money,” says Nicholas Bunio, a certified financial planner in Downingtown, Pennsylvania. “Meaning you need to pay either cash for the house, or mortgage the property. Not to mention fix up the property and yearly maintenance. Which costs money.”

Over the past year alone, the average cost of a 20% down payment for a home in the country’s 50 largest metropolitan areas has grown by 35% to nearly $63,000, according to recent data from LendingTree.

It’s no wonder, then, that wealthier respondents in Make It’s survey were more likely to have invested in real estate. Just 6% of respondents earning $50,000 or less said they bought real estate this year, compared with 12% earning between $50,000 and $99,000 and 21% earning $100,000 and up.