Stocks vs. Real Estate

Interpretation

The Stocks to Real Estate ratio divides the S&P 500 index by the Case-Shiller Home Price Index. Just like Market Cap to GDP, the Stocks to Real Estate ratio has an interesting historical track record and clearly shows the stock market bubbles of 1929 and 1999.
The Case-Shiller Home Price Index seeks to measure the price of all existing single-family housing stock. Based on the pioneering research of Karl E. Case and Robert J. Shiller the index is generally considered the leading measure of US residential real estate prices.

Data Sources

• Recent data
• Federal Reserve Bank of St. Louis: S&P 500
• Federal Reserve Bank of St. Louis: S&P/Case-Shiller US National Home Price Index
• Historical data
• Nasdaq: S&P 500
• Online Data Robert Shiller: Historical US Home prices

Further Information

• TradingView Chart: S&P 500 / Real Estate
• Investopedia: Has Real Estate or the Stock Market Performed Better Historically?
• Investopedia: Standard & Poor's 500 Index - S&P 500
• Investopedia: Understanding the Case-Shiller Housing Index
• BIS: Interest rates and house prices in the United States and around the world

Interpretation

This chart plots both the S&P 500 and the Case-Shiller Home Price Index. Over the long term the S&P 500 clearly outperforms residential property and is more volatile. The housing bubble and subsequent stock market crash are clearly visible in the chart.

Page created by Will Beaufoy