What Investors Think (And Why It Matters) - September 19, 2013

As part of our latest promotion, we polled past and potential investors as to their opinions on the investment landscape, and the results portray an interesting picture. Based on the average ratings, the stock market and housing market have the greatest degree of confidence, slightly above the banks. Using a Likert scale to evaluate the answers, Stock Market confidence rated a 3.72 out of a possible 5, and the Housing Market came in at 3.63. Confidence in banking was slightly lower, lagging behind at a 3.18. While this appears to be a fairly narrow range, the mode of the data presents a slightly different image. For the housing market, 73% of respondents claimed they were confident, where as 36% responded they felt neutral in regards to the stock market and banks. While a few respondents said they were very confident in the stock market, and inflated the average slightly, the mode of the data creates a strong showing for the housing market.













But what do these statistics really mean? The respondents ranged from prior clients to people investigating their options, yet responses grouped tightly around neutrality, with the exception of housing. As stated earlier, 73% of respondents viewed the housing market favorably as a place to invest, while only 55% said the same about the stock market and 45% had a favorable view of placing their money in banks. The reasons for this are simple to see for those keeping tabs on the latest investment news, and that’s precisely our job. The housing market has seen year over year growth since 2010, and returned to pre-bubble levels with a much more solid foundation. Home owners have seen an appreciation in values, and every month more and more underwater mortgages are climbing out of the red with fewer and fewer foreclosures. Yet the stock market experiences slow, occasional growth, technical glitches, and volatility not found in the other two investment types. And banks offer a mere pittance for savings accounts or certificate of deposits, making them poor choices to grow your money. This isn’t to say housing isn’t without its own dangers. 2008 made that painfully apparent to the world. But since then steps have been taken to ensure that similar pitfalls are avoided, and have created a much more sustainable growth in the industry. These improvements are evident, and reflect perfectly in the responses we received, and the high level of confidence in the housing market.

We’ve shared several articles following the change in consumer confidence as provided by Gallup. Just as consumer confidence drives recoveries, investor confidence can help to drive up a market. Improvements in the housing market at as a positive feedback loop, the better the market does, the more people place their trust in it and are willing to invest. In fact, those looking to invest in the real estate market have rivaled home owners in driving the recovery and growth seen over the past year and a half. This trend has proven vital for the resurgence of the housing market, as it has supplemented the small number of first time buyers that have lagged to enter due to other economic concerns. For a potential investor like you, this trend proves itself to be helpful in driving up returns. Increasing property values create more properties that are reaping the benefits and are able to successfully pay back the loans we make, which in turn ensures reliable returns on your investments.

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