What Is the ROI on Real Estate vs. the Stock Market?

When deciding whether to invest in a home or the stock market, you need to look at more than just return on investment. Lifestyle choices matter too. Think about how many bedrooms you need, whether you prefer a split floor plan, and the size of the yard. You'll also want to check the age of the roof, HVAC, and appliances. 

Most important of all are the location, the overall condition, and the price. 

Let's say, however, you only care about investment. Where’s the best place to park your cash? Let's compare four Phoenix-area neighborhoods to the stock market.

As the chart above shows, the median home price in Paradise Valley jumped 90% in the past five years. That’s a $2.7 million increase—from $3 million in August 2020 to $5.7 million today. (Source: Altos Research.)

In the City of Phoenix, prices rose 8%, reaching $515,000. Scottsdale’s median price grew 18%, to $1.3 million. In Arcadia (zip code 85018), home values climbed 36%, to $1.9 million.

Meanwhile, the S&P 500 rose 89% over the same period, reaching 6,404 in August 2025.

So, should families put all their money in the stock market instead of real estate? Not necessarily. Owning a home comes with tax benefits, along with costs, that these numbers don’t show. Plus, you gain the value of having a place to live. If you only invested in the stock market, you’d still have to subtract the cost of housing.

And don’t forget—living in your own home brings comfort and pride. Those benefits are real, even if they can’t be measured in dollars.

Table 1: Comparable Investment Growth Over the Last Five Years

Notes:

1. The results are for single family homes only. They exclude condos.
2. The starting dates are August 24, 2020 for the housing markets, and August 20, 2020 for the S&P 500.
3. The ending dates are August 15, 2024 for the housing markets, and August 19, 2025, for the S&P 500.
4. The values are the median prices for the prior seven days for the housing markets, and the closing price for that day for the S&P 500.
5. Tax and ownership costs are not included in this simple analysis.

In Summary 

This is a bare-bones way to compare local real estate to the stock market. Your personal financial and lifestyle situations need to be considered carefully. It's presented as a useful base case to be evaluated along with all other priorities when making the important decision on buying your home.