Real estate is a unique investment since returns include both the appreciation of the asset as well as rental income (assuming the asset is a rental property). Though this adds some complexity to comparing real estate returns to other asset class returns, on average, real estate investments have outperformed other investments, including stocks and bonds.
How much higher are the returns of real estate? The exact numbers will depend on the time frame, location, and many other factors, but average historical performance can provide a helpful benchmark. Over the last twenty years, real estate has averaged about ten percent in returns, even when accounting for the 2008 housing bubble. How does this compare to the performance of the stock market? The historical average annual return for the stock market has been about eight percent per year, meaning that the average annual return of real estate is about two percent higher than the stock market.
In addition to a higher overall return, real estate investing is often a more stable investment, with far less of the volatility seen in other investments, especially stocks.