Many investors no longer seeing real estate as top pick, survey says

Value Judgments

Your Money

July 24, 2005|By Janet Kidd Stewart

INVESTORS' enthusiasm for real estate is waning, a new survey suggests. Should we be scared or relieved?

My money is on relieved, but more about that later.

The Black Investor Survey by Charles Schwab Corp. and Ariel Capital Management Inc. is an annual pulse-taking of 1,000 investors whose annual income exceeds $50,000. A key finding is that black Americans remain less likely to invest in the stock market than their white counterparts.

But regardless of color, investors in this year's survey were substantially less likely to say real estate is the best overall investment. Last year, 61 percent of black investors and 51 percent of white investors chose real estate as the best investment overall; this year, 54 percent of blacks and 39 percent of whites put real estate at the top.

For white investors, the combined stocks and mutual funds categories outpaced real estate for the first time since 2002. Among blacks, insurance, individual bonds and stocks gained ground over 2004's results but were still below real estate.

"Real estate is probably seeing a cooling-off" period, said Carla Foster, director of Schwab's African-American Investor Services program, which published results of the survey last week.

Separately, hot-line counselors at Chicago-based ComPsych Corp., which runs employee assistance programs, say their volume of calls related to housing market jitters is running 50 percent ahead of last year.

"There's a lot of uncertainty about where prices and interest rates are going and how it applies to their personal situation," said Kathy Stoughton, a ComPsych financial specialist and a former mortgage broker. "A lot of people made a decision to get into a bigger house and now are struggling to keep it."

Callers are asking for help in checking out interest-only and other mortgage offers as they stretch to keep up, she said.

But unlike the stock market bubble of the late 1990s the shift in attitudes about real estate is happening before - not after - a huge price decline. Disasters are almost always mitigated with advance warning, which is why I'm more relieved than scared about the decline in popularity for real estate as an investment and increasing consumer worry.

But don't look for black investors to stampede out of the real estate market anytime soon, said Mellody Hobson, Ariel's president.

"Many high-income blacks - like their grandparents - still want to invest in something they can see and touch," she said.

E-mail Janet Kidd Stewart at

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