You are reading it ... incompletely and getting the incorrect impression that real estate is a better investment than equities, which it absolutely IS NOT. The

You are reading it ... incompletely and getting the incorrect impression that real estate is a better investment than equities, which it absolutely IS NOT. The study explicitly neglects to factor in "leveraged real estate." So you spend $1,000,000 on a house. With interest on a 30 year note, typically, that house with interest will cost $3,000,000 total. As an investment most people only consider capital gains, but the majority of gains according to the PDF are from rental income. Source, Page 3, paragraph 2: The majority of households in advanced economies today hold a leveraged portfolio in their local real estate market. As with any leveraged portfolio, this significantly increases both the risk and the return associated with the investment. And today, unlike in the early twentieth century, houses can be levered much more than equities. The benchmark rent-price ratios from the IPD used to construct estimates of the return to housing refer to rent-price ratios of unleveraged real estate. Consequently, the estimates presented so far constitute only un-levered housing returns of a hypothetical long-only investor, which is symmetric to the way we (and the literature) have treated equities.