Introduction
Investors often debate investing in real estate versus the stock market. This report compares the inflation-adjusted performance of two strategies over 25 years (2000–2025): purchasing a median-priced single-family home in Phoenix, AZ (with rental income), versus investing an equivalent amount (the home’s 20% down payment) in an S&P 500 index fund with dividends reinvested. We detail assumptions, annual cash flows, equity build-up, and final outcomes for each strategy, then summarize key metrics in a comparison table. All figures are adjusted for inflation to present real returns, and sources such as FRED, HUD, and historical market data are used for accuracy.
1. Phoenix Real Estate Investment (2000–2025)
Purchase Assumptions: We assume the investor bought a median-priced Phoenix home in 2000. The year 2000 average sale price in the Phoenix metro was about $171,700 (we use this as an approximate median). The purchase is financed with 20% down ($34,340) and an 80% mortgage ($137,360). In 2000, 30-year fixed mortgage rates averaged ≈8.1%, so we assume a 30-year fixed loan at 8% interest. The property is a detached single-family home (≈3-bedroom) to be rented out continuously.
Property Value Growth: Phoenix housing saw significant appreciation over 25 years. According to the S&P/Case-Shiller Home Price Index, Phoenix home values roughly tripled from 2000 to early 2025. (The index rose from 100 in Jan 2000 to ~330 by 2025.) In dollar terms, a ~$172K home in 2000 could be worth on the order of $500K+ by 2025. For example, the average Phoenix home price grew from ~$172K in 2000 to about $556K in 2023, and median listings in early 2025 were in the $430–$525K range. This corresponds to roughly 4.5–5% annual price appreciation in nominal terms (well above inflation). We will use an approximate 4.8% yearly home appreciation rate in our calculations, which aligns with the Phoenix Case-Shiller index trend. In real (inflation-adjusted) terms, this price growth was modest – U.S. inflation averaged ~2.3%/yr over this period, so Phoenix home values gained roughly 2%–2.5% per year above inflation on average.
Rental Income and Growth: We assume the home was rented continuously from 2000 through 2025 (no prolonged vacancies). In 2000, a typical 3-bedroom home in Phoenix commanded around $893/month in rent (per HUD Fair Market Rents). That equates to ~$10,716 in annual gross rent in 2000, about a 6.2% gross yield on the ~$172K home. Rents tend to rise with inflation and local demand. Phoenix experienced strong rent growth in the 2010s and early 2020s. By FY2025, the HUD-estimated fair market rent for a 3-bedroom in Phoenix is $2,624/month (about $31,500/year), nearly triple the 2000 level. This implies an average rent growth of ~4.4% annually (roughly tracking home price appreciation). We will assume rent increases ~3–4% per year on average, starting at ~$893 in 2000 and reaching ~$2,600+ by 2025.
Operating Costs Assumptions: Owning and managing the rental incurs ongoing expenses:
Property Taxes: Arizona property taxes are relatively low; Phoenix’s effective tax rate is ~1.0% of market value (about 1.2% in 2020 for the city). We assume annual property tax ≈ 1% of the home’s value. As the home value rises, taxes increase accordingly (from ~$1,700 in 2000 to ~$5,000 in 2025, nominal).
Homeowners Insurance: Estimated at ~0.3–0.5% of value per year. We assume ~$600–$900 in 2000 (≈0.5% of value) rising with inflation to a few thousand by 2025.
Maintenance and Repairs: We budget ~1% of property value per year for maintenance/reserves (about $1,700 in year 2000, increasing over time with home value). Actual needs vary, but older homes require ongoing upkeep (roof, A/C, etc.).
Property Management: If the owner hires a property manager, typical fees are ~8–10% of rent. We assume 10% of rent is paid for management and leasing, equivalent to ~$1,070 in 2000 and ~$3,150 by 2025. (An owner-manager could save this cost but would invest personal time.)
Mortgage Payments: The 80% loan (~$137K @ 8% for 30 years) has a fixed payment of about $1,015 per month ($12,180/year). This debt service stays constant in nominal terms over 30 years. In early years, most of this payment is interest; by later years more goes toward principal. (At 8% fixed, roughly $11K of interest is paid in year 1 on the $137K balance, gradually declining each year as the loan amortizes.)
Annual Cash Flow Analysis: We calculate net rental cash flow each year = Rent received – operating costs – mortgage payment. In 2000, rent (~$10,716) would not fully cover the mortgage and expenses:
Year 2000: Rent ~$10.7K. Expenses: tax ~$1.7K, insurance ~$0.8K, maintenance ~$1.7K, management ~$1.1K = $5.3K operating costs (excluding mortgage) for the year. Add the $12.2K mortgage payments, and total outflows were ~$17.5K. Net cash flow in 2000 was about -$6,800 (a loss) that the investor must pay out-of-pocket. This negative cash flow is expected initially because the high 8% interest cost and expenses exceed rental income. The shortfall amounts to roughly 6% of the property value in year 1, meaning the investor had to contribute an extra ~$6.8K in addition to the down payment to cover costs.
Cash Flow Trajectory (2000–2005): As years progress, rents increase (3–4% annually assumed) while the mortgage payment stays fixed. Operating costs also rise (property tax and maintenance grow with home value/inflation, ~2–3%/yr assumed). In the first 5–10 years, net cash flow remained slightly negative or near breakeven. For example, by 2005 the annual rent might be ~$12.5K, but expenses (perhaps ~$6–7K) plus the $12.2K mortgage still result in a small deficit. However, the annual loss narrows each year as rent climbs. The investor likely continues making modest out-of-pocket contributions in the early 2000s to cover these shortfalls.
Cash Flow in Later Years: By the mid-to-late 2010s, the combination of higher rent and a declining interest burden improves cash flow. The interest portion of the mortgage in year 15 (2015) is much lower than in 2000, since a significant chunk of principal has been paid off. Meanwhile, rent by 2015 could be ~$18K/yr. We estimate that sometime in the 2010s, the property’s cash flow turned slightly positive (rent finally exceeded mortgage + expenses). By the 2020s, the property likely generates neutral to positive cash flow. By 2025, with rent around ~$30K/year and total expenses + mortgage around ~$28–29K, the property is roughly breakeven to +$1–2K per year in cash flow. In our model, 2025 net cash flow is about +$1,400 (a small profit for the year).
Note: The above cash flow pattern assumes no mortgage refinancing. In reality, many owners would refinance at lower rates (e.g. in the mid-2000s or 2010s when rates fell to ~5% or below). Refinancing could dramatically improve cash flow (reducing interest costs), potentially turning cash flow positive much earlier. For simplicity, we kept the original 8% loan throughout. The investor also benefited from tax deductions (mortgage interest, depreciation), which we have not itemized but which effectively improve after-tax cash flows.
Equity Build-Up (Loan Amortization): A critical component of real estate return is equity gained by paying down the mortgage. Over 25 years, the tenant’s rent (and any owner contributions) have been servicing the loan, steadily chipping away at principal. On a 30-year amortization, by the end of 2025 (after 25 years of payments) roughly 83% of the loan principal is paid off. The remaining loan balance in 2025 would be only about ~$40K (out of the original $137K). This means the investor built over $97K in home equity just from loan repayment (most of it effectively paid via rental income). The initial $34K down payment also remains as equity. Thus, by 2025, the investor owns the bulk of the home and has very little debt left against it – even before accounting for price appreciation.
Home Value Appreciation: As noted, the property’s market value increased dramatically. From ~$172K in 2000 it grew to an estimated $450–$550K by 2025, based on Phoenix market data. This ~3× increase in nominal value is a powerful contributor to returns. For instance, using a midpoint ~$500K value in 2025, the capital gain on the property is on the order of +$330K (ignoring inflation). Importantly, this gain accrues on the total property value, not just the investor’s cash investment – a benefit of leverage. Even after inflation, the home’s value rose substantially. (For reference, overall consumer prices roughly doubled from 2000 to 2025, so in inflation-adjusted terms the home might be worth ~1.5× its 2000 value, equating to a real appreciation of +50% over 25 years.)
End Value and Returns (Real Estate): If the investor sells the home at the end of 2025, here is the outcome: The home is worth say $500K (approx). The remaining loan is only ~$40K, so the owner’s equity upon sale is about $460,000. Over 25 years the owner also received net rental cash flow – which in our scenario was slightly negative in early years and slightly positive later. Cumulatively, the net cash flow was roughly break-even in real dollars (in nominal terms, the owner might have paid a total of ~$80K out of pocket over many years, but those were mostly early-year dollars; later rental profits in nominal terms offset some of that). For a simplified real return calculation, one can consider that the effective investment by the owner was the initial $34K down plus perhaps ~$10–20K of net holding costs in today’s dollars. In return, they have $460K in equity at sale. Even after adjusting for inflation, this is a huge increase in wealth from the initial investment.
To quantify, the inflation-adjusted return can be expressed as an annual rate. Based on our cash flow model, the real estate investment’s internal rate of return comes out to roughly ~5% per year in real terms (approximately 7.5–8% annual nominal IRR). This means the real purchasing power of the investor’s money grew about five percent annually via the Phoenix rental property. (For context, a 5% real return means the investor’s wealth in inflation-adjusted terms roughly tripled over 25 years.) The majority of this return was driven by appreciation and loan-fueled equity build-up, not by yearly cash flow. In fact, the net rental income, when discounted for inflation, contributed little to the overall return – essentially the rental income just helped pay the mortgage and expenses. The payoff came at the end, with the property’s increased equity and value.
Summary of Real Estate Metrics (2000–2025):
Initial Home Price (2000): ~$172,000 (20% down = $34.3K).
Property Value in 2025: ≈$500,000 (median home prices ~$430–550K by 2025).
Total Nominal Appreciation: ~+190% (home value +$330K). Average annual appreciation ~4.8% (about +2% real after inflation).
Rent in 2000: ~$893/month = $10.7K/year.
Rent in 2025: ~$2,600/month = $31K/year (FMR for 3BR).
Total Rent Growth: ~+194% (rent nearly tripled, ~4.4% annual). This roughly kept pace with home price appreciation, so gross yield remained in the ~6% range.
Annual Operating Costs: Started ~$5.3K in 2000, rising to ~$15K+ in 2025 (with home value). Dominated by tax (~1% of value) and maintenance (~1%).
Mortgage: $137K at ~8% fixed. Annual P&I ~$12.2K. Remaining loan ≈ $40K by 2025 (after 25 years of payments).
Net Rental Cash Flow: Negative (-$6.8K) in 2000; improved each year; roughly breakeven by mid-2010s; modest positive (+$1–2K/year) by 2025. Cumulative nominal net cash flow over 25 years ≈ -$82K (owner contributed this over time), but much of that was in early 2000s dollars. In real terms, the lifetime cash flow was around zero (later positive cash flows offset earlier negatives when properly inflation-discounted).
Equity Build (Amortization): Paid down ~$97K of principal (gained that much equity) over 25 years, funded largely by rent.
Final Equity Value (2025): ~$460K (home value minus remaining debt).
Inflation-Adjusted Return: ≈5.0% real annual IRR (roughly +450% total real return on initial down payment). In nominal terms, total ROI was much higher (on paper, ~$34K grew to $460K equity, a +1240% nominal return, but not inflation-adjusted and not accounting for ongoing cash inputs). The real IRR of ~5% means the Phoenix rental investment solidly beat inflation and multiplied the investor’s purchasing power ~3×, albeit with the caveat of illiquidity and cash flow management over the years.
2. S&P 500 Index Investment (2000–2025)
Initial Investment: Instead of buying a house, the second strategy invests the equivalent of the 20% down payment into an S&P 500 index fund at the start of 2000. The amount invested is $34,340 (the same cash outlay as the home down payment). We assume dividends are reinvested and no additional contributions are made (unlike the real estate case, which required some extra cash in early years). This is a passive, buy-and-hold investment in the broad U.S. stock market.
Stock Market Performance: The period 2000–2025 saw the S&P 500 go through two major bear markets (the early-2000s dot-com crash and 2008–09 crisis) and strong bull markets (notably 2003–2007, the 2010s, and the post-2020 surge). Despite volatility, the market’s long-term trend was upward. The S&P 500 index (price) roughly tripled from 2000 to 2025 in nominal terms. Including dividends, the total return was even greater. According to a comprehensive analysis, a lump-sum $100 investment in the S&P at the start of 2000 grew to about $661 by end of 2025 with dividends reinvested. That is a 561% nominal increase, which equates to a 7.7% compound annual growth rate (CAGR). Over the same period, inflation eroded purchasing power, so we must adjust for it: the $661 nominal end value corresponds to about $254 in year-2000 dollars. In other words, the inflation-adjusted growth was +254% cumulatively, or roughly 5.1% per year in real terms.
To summarize: the S&P 500 delivered ~7.7%/yr nominal returns and ~5.1%/yr real returns over 2000–2025. This aligns with historical stock performance (U.S. large-cap stocks have historically returned ~10% nominal, ~6–7% real over long periods, and the 2000–2025 span was a bit lower but in that ballpark).
Final Portfolio Value: The initial $34,340 grew by 2025 to a substantial sum. Using the growth factors above: a 561% total nominal return means the investment is 6.61× its original value. Thus, $34,340 * 6.61 ≈ $226,700 (nominal dollars). We can also calculate it in real terms (inflation-adjusted to 2000 dollars): a 254% real return means the investment’s purchasing power grew to 3.54× original, so $34,340 in 2000 dollars is worth the equivalent of ~$121,500 in 2025 dollars. However, to avoid confusion, we’ll state results in 2025 nominal dollars since that’s the actual account value: approximately $225–$230K. This assumes all dividends were reinvested and ignores any taxes. Many index funds track this performance; for example, the SPDR S&P 500 ETF (SPY) went from about $148/share in Jan 2000 to ~$450 by early 2025, and paid significant cumulative dividends along the way – the reinvested effect yielding a final value in line with the above calculation.
Interim Cash Flows: Unlike real estate, the stock investment did not require any additional cash injections after the initial $34K. It was entirely hands-off. Dividends provided cash income each year (the S&P 500 dividend yield averaged ~1.5–2% over the period), but we assumed they were automatically reinvested to buy more shares, rather than taken as spendable cash. Thus, the investor did not pocket any yearly cash flow; all gains were internal. This is an important contrast: the stock strategy did not call for more out-of-pocket money, nor did it produce spendable income (except what could have been withdrawn from dividends). Everything was left to compound.
Volatility was a factor – for instance, the $34K would have dropped to roughly $25K by late 2002 during the tech bust, climbed above $60K in 2007, fallen back near $40K in 2009, then multiplied during the 2010s bull market. By 2025 it reached ~$225K. But through all this, the investor just stayed invested, ending with a strong result.
Inflation-Adjusted Return: As noted, the S&P investment achieved about +254% total return in real terms over 25 years. That means the initial capital’s purchasing power nearly quadrupled. The real CAGR was ~5.1%. This is slightly higher than the real estate IRR we estimated. Notably, this stock return was achieved passively and without leverage. Stocks inherently provided a higher growth rate to compensate for their volatility. Over this horizon, the S&P 500’s real growth outpaced national housing price appreciation (which was around +196% since 2000 for U.S. home values, per Zillow data). However, our Phoenix home was leveraged and in a high-growth market, which narrowed the gap considerably.
Summary of S&P 500 Metrics:
Initial Investment (2000): $34,340 into S&P 500 index fund.
Final Value (2025): ≈$225,000 (nominal). This is the portfolio balance after 25 years of compounded growth.
Nominal Total Return: +561% (6.61× increase; 7.7% CAGR).
Inflation-Adjusted Total Return: +254% (3.54× increase in real terms; ~5.1% real CAGR).
Dividends Reinvested: Yes – all dividends rolled into buying more shares, fueling compounding. Dividend yield ~1–2%/yr contributed significantly to the total return.
Interim Cash Flow: None taken; no additional contributions required. (If one did withdraw dividends annually, the final value and return would be lower.)
Volatility: High – endured two ~50% drawdowns. But over 25 years, volatility averaged out to a steady upward trend in value. The investor’s patience and long-term horizon were rewarded with strong real growth.
3. Comparison of Results: Real Estate vs. Stocks
Both strategies proved to be profitable long-term investments and both beat inflation, but their character, cash flows, and end results differ. Below we summarize key performance metrics side-by-side:
Metric (2000–2025)
Phoenix Real Estate (Rental Home)
S&P 500 Investment (Index Fund)
Initial Investment (2000)
$34,340 down payment (20% of $171.7K price); plus ~$6.8K in first-year cash outlay for expenses.
$34,340 lump sum into S&P 500 (no debt or further contributions).
Financing Leverage
80% loan (@ ~8% interest) amplifies gains (and losses); investor controlled a $172K asset with $34K down.
No leverage (investment value directly tied to cash invested).
Asset Value Growth (Nominal)
Home value ~$172K → ~$500K in 2025 (≈3× increase, +190%). Nominal appreciation ~4.8%/yr (~2%/yr above inflation).
Portfolio $34K → ~$225K in 2025 (≈6.6× increase, +561%). Nominal total return ~7.7%/yr.
Inflation-Adjusted Growth
Home’s real value ~$172K (in 2000 $) → ~$270K (in 2000 $) by 2025. Real appreciation ~+57% total (~2%/yr).
Investment’s real value $34K (2000 $) → ~$121K (2000 $) in 2025. Real gain +254% total (~5.1%/yr).
Annual Income Yield (Starting)
~6.2% gross rent yield in 2000 (rent $10.7K on $172K home). Net yield was negative after expenses/mortgage initially.
~1.6% dividend yield in 2000 (S&P 500 dividends) – reinvested. No spendable income taken.
Annual Income Growth
Rent rose roughly with inflation (~4% nom. avg). $893/mo → $2,624/mo by 2025. By 2025, ~6.3% gross yield on appreciated value (rent $31K on $500K home).
Dividends grew roughly with earnings/inflation. Dividend income on $34K grew from ~$600 in 2000 to ~$4,000 in 2025 (reinvested; not paid out).
Net Cash Flow Pattern
Negative early, improving to positive: e.g. Year1 net -$6.8K; breakeven around ~Year15; Year25 net +$1.4K (est.). Cumulative nominal net cash flow ≈ -$80K (early deficits covered by later rent or owner) – essentially no real profit from cash flow alone.
No cash flow (all gains unrealized until sale; dividends reinvested). Investor did not need to add money beyond initial investment, unlike real estate which needed cash infusions in early years.
Equity Build-Up (Loan Paydown)
Added ~$97K equity via principal payments over 25 yrs (loan bal. $137K → ~$40K). This was effectively “forced savings” funded by rent/owner.
Not applicable (no debt). All growth came from market appreciation and reinvested dividends.
Final Asset Value (2025)
Home: ~$500,000 market value. Equity: ~$460,000 (after paying off ~$40K remaining mortgage at sale).
Portfolio: ~$225,000 market value (all equity, no debt).
Total Nominal Return
≈+1,240% on cash investment (House: $34K → $460K equity). However, this ignores interim cash outflows. Accounting for all cash flows, nominal IRR ≈7.5–8%.
+561% (Portfolio: $34K → $225K). This is a 7.7% CAGR nominal. No extra cash was added or needed.
Total Real Return (Inflation-Adj.)
~+450% on initial investment in real terms (approx; down payment grew ~5.5× in 2000-$). Real IRR ≈ 5.0%/year. (The investor’s real wealth ~quadrupled, from $34K to ~$155K in 2000 dollars.)
+254% real. Real CAGR ≈ 5.1%/year. (Wealth ~3.54× in 2000 dollars; $34K → $121K real.)
Liquidity & Flexibility
Low liquidity – capital tied up in property. Selling costs ~6% (not figured above) and time to sell. Partial cash-outs only via refinancing. Cannot easily rebalance or diversify the single asset.
High liquidity – can sell any time at market price (minimal transaction cost via ETF). Easily divisible; can withdraw portions or rebalance portfolio. Diversified across 500 companies.
Active Management
Relatively high: time & effort to manage tenants, maintenance, property taxes, etc. (could be outsourced at cost). Periodic major repairs (roof, A/C) not explicitly in annual 1% maintenance could occur.
Very low: truly passive after initial investment. No management required beyond maybe occasional check-ups on the fund.
Risk and Volatility
Property values can be volatile (Phoenix had a boom, a 50%+ crash in 2008, then a strong rebound). Rents can fluctuate with local economy. Leverage amplifies risk – potential for loss of equity if home value fell below loan during downturn (many Phoenix owners in 2008 were “underwater”). Vacancy or tenant default risk affects cash flow. However, housing downturns tend to be less frequent and less correlated with stock crashes. Overall, moderate volatility in appraised value; low short-term liquidity.
The S&P 500 is highly volatile year to year (e.g. -37% in 2008, +26% in 2009). The investment’s value could swing widely (standard deviation ~15% annually). No leverage in this case, so no margin calls, but a 50% market drop would halve the portfolio. Historically, the stock market recovered and grew over long periods, but investors must tolerate severe drawdowns. Diversification across the market mitigates idiosyncratic risk.
Overall Performance: Both investments yielded similar inflation-adjusted returns (~5% annually) over 25 years, but they achieved this via different paths. The Phoenix rental property delivered a comparable real return to the S&P 500 mainly thanks to leverage (using the bank’s money) and the exceptional housing boom in Phoenix (home values tripled). The real estate strategy turned a $34K cash investment into ~$460K of equity, outpacing the stock portfolio’s ~$225K final value in nominal terms. However, the homeowner had to actively manage the property and cover cash flow shortfalls along the way, and only reaped the bulk of gains at the end when the house was sold. In risk terms, the real estate had periods of negative equity potential (during the 2008 crash, Phoenix prices plunged over 50%, which likely temporarily wiped out the investor’s equity on paper). The S&P 500 investor saw more frequent valuation volatility but simply held the investment and let it compound.
Inflation-Adjusted Return Comparison: After adjusting for inflation, the end results are quite close. The stock investor’s purchasing power grew slightly more: +254% versus the landlord’s ~+450% on initial cash – but note the landlord’s figure doesn’t fully account for the extra cash infusions made over time. When properly accounting for all cash flows, the real internal rate of return for the property (≈5.0% real) nearly matches the stock market’s ~5.1% real CAGR. In other words, both strategies yielded roughly 5%/year above inflation over the 25-year span. This is a notable finding: despite housing’s lower unlevered growth rate, the use of a mortgage (and reinvestment of rental income into the property via expenses and loan paydown) allowed the real estate investment to keep pace with the S&P 500 in this case.
However, the total nominal return on the real estate appears higher (because $460K vs $225K end values) – but one must remember the real estate investor had to deploy more cash over time and took on debt. If we simulate a true apples-to-apples scenario (e.g., the stock investor could have periodically invested the same extra amounts that the landlord was paying during lean years), the stock portfolio might have grown even larger.
Key Takeaways: Real estate and stocks both proved to be effective inflation hedges and wealth builders from 2000 to 2025. The Phoenix rental provided tangible benefits: leverage magnified gains, and the investor built equity with other people’s money (rent from tenants), ending with a valuable asset (a house) that kept pace with inflation. The investor also had use of the property (though in this case it was rented out, not owner-occupied). On the downside, it required active involvement and interim cash support. The S&P 500 investment grew steadily and slightly faster in real terms, with minimal effort and high liquidity, but came with high market volatility and no interim cash flow (unless one chooses to take dividends). In this 25-year period, their final inflation-adjusted wealth outcomes were similar – a testament to how a well-chosen real estate investment with leverage can rival the stock market’s returns, while the stock market’s simplicity and strong compound growth remain hard to beat over the long run.
Conclusion
In inflation-adjusted terms, the total returns of the Phoenix real estate investment and the S&P 500 investment from 2000 to 2025 ended up in the same range (~5% real CAGR). The real estate strategy yielded substantial equity accumulation through property appreciation and loan amortization, turning an initial down payment into nearly half a million dollars of equity (2025 nominal) with an IRR on the order of 7–8% (5% real). The investor’s equity grew not only from rising home prices but also from tenants effectively paying off the mortgage over time. Meanwhile, net rental cash flow was minimal in real terms – the property largely “paid for itself” but didn’t throw off large spendable income beyond covering costs (until perhaps after the mortgage is fully paid in year 30). In contrast, the S&P 500 investment compounded more visibly, reaching roughly $225K (2025 dollars) from the same initial stake, with all gains reinvested. Its inflation-adjusted performance (~5% real) was slightly higher and achieved without leverage or active management. The stock portfolio’s value accumulation was front-loaded in the sense that it was liquid and accessible at any time (albeit subject to market swings), whereas the real estate gains were back-loaded (realized upon sale) and required patience and management.
Ultimately, both strategies beat inflation significantly and would be considered successful investments over 25 years. The real estate route provided larger nominal wealth by 2025, but demanded ongoing effort and interim cash, essentially converting those inputs and the passage of time into property equity. The stock route provided steadier compounding of wealth with greater flexibility and arguably a slightly higher risk-adjusted return (given diversification). An investor’s choice might come down to tolerance for leverage and property management, need for liquidity or interim income, and confidence in local real estate vs. the broad stock market. In our comparison, the Phoenix real estate investment matched the S&P 500’s inflation-adjusted performance remarkably well, highlighting that a leveraged rental property in a booming market can hold its own against equities in the long run.
Sources: Historical Phoenix housing prices and rents from FRED, HUD, and local data; S&P 500 return data from OfficialData.org and other analyses; inflation data from BLS (via OfficialData); and comparative insights from research on housing vs. stock returns.