Real estate is no longer the wealth builder it once was — but is it a bad investment?

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Real estate is no longer the wealth builder it once was — but is it a bad investment? Brian O’Connell Sat, July 11, 2026 at 5:00 AM EDT 8 min read BRK-B Back in 2012, Wall Street icon Warren Buffett said if he could snap up several hundred thousand shares of homes, he'd do so. Flash forward a decade or more, and the Sage of Omaha has reversed course on real estate investing, and for an obvious reason. "On real estate, it's so much harder than stocks," he said at Berkshire Hathaway's 2025 shareholder meeting. (1) "It's so much harder than stocks in terms of negotiating terms and time spent . . . when real estate gets in trouble, you find out you're dealing with more than just an equity holder." Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here's what it is and 3 simple steps to fix it ASAP Millionaires under 43 hold only 25% of their wealth in stocks. Here's where their money is actually going Buffett now says real estate investing is a tough task, at least relative to stock market investing. When you're investing in real estate , he noted, you're dealing with several components, including third parties that are anxious about letting a property go and will fight over every line on a home sales contract. "You have a single owner or a family that has owned for a long time," he said. "To them, it's an enormous decision to sell, but if you go to the New York Stock Exchange and make billions of dollars anonymously and you can do that in five minutes . . . It's a whole different game." Buffett does say his company has done a few real estate deals "that came our way in 2008 and 2009," but the time it took to close the deals was not worth it. Yet the fact that real estate deals "can take forever and negotiations can take years" should prompt regular investors and homebuyers to take the same stance. Maybe not, especially considering it's no longer the easy wealth-building investment it was from roughly 2012 to 2022. Take the latest round of data from the S&P Cotality Case-Shiller Home Price Indices (2), which concludes the current U.S. housing market has basically slowed to a halt, with U.S. homes declining by 0.1% in April 2026. "April's figures confirm that U.S. home prices remain essentially flat, with the S&P Cotality Case-Shiller National Home Price Index up a scant 0.8% year over year, just above March's 0.7% pace," said Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. "With inflation accelerating to 3.8% in April, U.S. home values have now declined in real terms for an 11th straight month, further eroding inflation-adjusted housing wealth." Other industry data points indicate U.S. mortgage rates still hover above 6%, increasing borrowing costs compared with the 2% to 3% loans many homeowners locked in during 2020-2021. Meanwhile, insurance, property taxes, maintenance, and HOA costs have risen in the last few years, reducing net returns for both homeowners and investors. Insurance premiums alone have increased dramatically over the past several years, rising by 46.8% from 2020 to 2025, with annual rate increases averaging 12.7% in 2025 and up another 6% in 2025, according to Lending Tree. (3) Those numbers are making life more difficult for real estate buyers, who can't seem to catch a break. "We're getting a different kind of call lately, right, the people who first reached out and didn't end up selling are coming back now, and the math on where they're at has moved upward," Doug Van Soest, co-owner of SoCal Home Buyers Somewhere, told Moneywise. Van Soest, who's been buying properties in southern California since 2008, says between 30% to 40% percent of his firm's deals start that way. "The buyers calling back lately hadn't really planned for higher purchase costs," he noted. That's a big problem for real estate buyers , who sit on the sidelines for a year or two, thinking rates will come down. "They might or might not, but you're still not where you were in 2021," Van Soest noted. Skyrocketing insurance rates have also curbed real estate's investment appeal In hard-hit California, Van Soest said the fire corridor markets his firm's work have seen insurance rates rise two or three times what standard coverage cost five years ago. "That number wasn't in anyone's calculation when they bought a property, and it catches people who did everything else right," he said. Some real estate experts say that buying a home to live in isn't a pure-play investment like a stock or an index fund, which, aside from the purchase price and fees, incurs no additional costs. "A primary residence should not automatically be considered a true investment," Jesse Wyatt, CEO of Synergy Redevelopers, Synergy Buys Houses LLC, in Jacksonville, Fla., told Moneywise. "It can appreciate, provide stability, and protect someone from future rent increases, but it usually does not produce income. In many cases, it continually requires more income to maintain." That's a point homeowners often miss, as most sellers calculate their return by comparing what they paid and what they eventually sold the home for. "They often leave out years of mortgage interest, property taxes, insurance, repairs, maintenance, renovations, closing costs, realtor fees, and selling expenses," Wyatt said. "They may have made money, but the increase in the selling price does not tell the complete story." Large amounts of cash are also spent on making a home personal, adding to an owner's liability costs. "There's nothing wrong with that, but a homeowner should not assume that every dollar spent on upgrades will be returned when the property is sold," Wyatt added. Additionally, homebuyers who are short on cash but want to buy a home, especially as a rental investment, need to get creative. For instance, instead of putting all available capital into a personal home, a real estate investor may decide to use part of it to purchase a rental property or a small multifamily property. "If purchased correctly, rental income can help cover the mortgage, maintenance, and other operating expenses while the owner builds equity over time," Wyatt said. So-called 'house hacking' can also be a strong option for property investors, particularly those just starting out. "That could mean purchasing a duplex or another small multifamily property, living in one unit and renting the others," Wyatt said. "It gives the owner a place to live while allowing rental income to reduce the cost of housing." Other real estate advantages are in play, as the owner may manage the property personally at first, allowing them to understand leasing, repairs, expenses and tenant management. "Later, if the property can support the additional expense, management can be turned over to a professional company," Wyatt added. When the buyer is ready to move into a different home, the original property may remain an income-producing asset. "The rental income from that property could then help offset the cost of the next place they live," Wyatt said. Wyatt said he believes real estate itself has not become a bad investment. The larger problem is buying the wrong property with the wrong financing for the wrong purpose. "People should compare the complete cost of owning with the complete cost of renting," he noted. "They should consider how long they expect to stay, how much capital will be tied up, what repairs and ongoing expenses may arise, and what that money could potentially accomplish elsewhere." Other industry professionals say that real estate didn't become a bad investment, but the lazy version of the argument did. "Just buy, and you'll build wealth" worked as advice when rates and prices forgave mistakes, Frederick Blum, a real estate broker and owner at San Diego-based Blum Realty Group, told Moneywise. "Today, the holding period, reserves, insurance, taxes, maintenance, and opportunity cost all get a vote." Blum also notes that a primary residence is part investment and part lifestyle purchase, and it still builds wealth for owners who can hold long enough, maintain reserves, and buy a home that fits their life rather than stretching for status. "Yet it disappoints buyers who expect fast appreciation to rescue an uncomfortable payment," he added. "The honest comparison was never owning versus renting in the abstract — it's owning this property, in this market, for this realistic timeline, against the true cost of renting and investing the difference." 'Gold still crashing!': Robert Kiyosaki admits he was wrong — but doubles down on his $35K prediction The tax breaks in Trump's 'big beautiful bill' expire after 2028 — and experts say most people won't act in time. What to do before the window closes Here's the average income of Americans by age in 2026. Are you keeping up or falling behind? When he dies, Warren Buffett said 90% of his wife's inheritance will go into a single investment. Here's why (and how you can do it too) We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines . YouTube ( 1 ); S&P Global ( 2 ); LendingTree ( 3 ) This article originally appeared on Moneywise.com under the title: Real estate is no longer the wealth builder it once was — but is it a bad investment? This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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