One of the advantages of investing in real estate is that it provides more stability than many other investments. This stability means less volatility in the overall portfolio of an investor. There are a few reasons why real estate has less volatility than many other investments, but one of the key reasons is the simple fact that regardless of the state of the economy, everyone needs a home.
While housing markets may fluctuate in price, the overall demand for housing remains relatively stable. Housing is not like stocks, bonds, or even art. People may choose to sell all of the stocks, bonds, art, etc. that they’re invested in. But people cannot leave the housing market in this manner. When people choose to sell a home or move out of a rental property, they must still seek housing elsewhere. This is not to say that real estate does not have its own set of risks or fluctuation in prices, but as a whole, the consistent need for housing leads to far more stability in real estate.
