The days of buying a modest home and then selling it years later for an enormous profit are likely over, contends an article in Barron’s. Housing prices aren’t likely to escalate on the scale of the housing frenzy from 15 years ago, and history has shown that the stock market actually returns nearly twice as much as investing in residential real estate.

In the decades between 1972 to 2021, stocks returned 12.47% annually, compared to residential housing which returned 4.51%. In the last decade, from 2012 to 2021, stocks returned 16.98% on average, versus housing at 7.38%, according to data from Aswath Damodaran, professor at NYU Stern School of Business.

Meanwhile, Robert Shiller, who created the housing index, and Anne K. Thompson conducted a study for the Brookings Institute that found most of those surveyed believed that “panic buying that caused prices to become irrelevant” was the result of the recent bidding wars, especially as buyers stampeded into the suburbs looking for more space in the wake of the pandemic. Mortgage rates at record lows gave buyers more leverage; Freddie Mac’s 30-year-loans were down to 3.05% at the end of 2021, making the monthly payment of a house bought for $408,100 with a 20% down payment a relatively low $1,345, the article details. But now, with mortgages rates climbing up to 4.67%, the same house bought for the same amount of money would have a monthly payment of $1,687. As affordability declines, home-price appreciation is sure to follow.

While current home buyers may be realistic about the recent trends in home prices, they might also be prone to unrealistic expectations about the value of homes in the long-run, Shiller and Thompson’s research found. When Professor Damodaran parsed their data, it showed that those who purchased homes at the peak of the bubble in 2006 didn’t totally recover from the bust in 2008 for 10 years. It was a similar situation in 1989, when those who bought at that peak didn’t recover until 1992. And that’s not factoring in closing and transaction costs, which are substantial for residential real estate.

Additionally, the article contends, being able to deal with the multitude of things that can happen in a person’s life – job loss, better opportunities elsewhere, divorce, family deaths – by picking up stakes quickly with easily movable and liquid assets could offer more freedom in the short term and more wealth in the long term.