Americans face decision on real estate vs. S&P 500 in 2026

When Americans plan for long-term wealth, two assets dominate the conversation: real estate and the stock market. The choice between them, or how to balance both, is one of the most consequential financial decisions millions of households face when evaluating both career growth and retirement planning.

The 2026 housing market has made that decision feel harder than it has in years. Mortgage rates have climbed back into the 6.3 to 6.5% range, and real estate investor sentiment has dropped - as seen by BiggerPockets' forward-looking Pulse Index falling from 150 in Q1 to 112 in Q2.

Meanwhile, the S&P 500's continued strength has created real opportunity cost for capital sitting on the sidelines waiting for housing conditions to improve. For investors weighing where to put new money, the math feels less obvious than it did a year ago.

But while the housing market has clearly shifted, BiggerPockets Chief Investment Officer Dave Meyer says the long-term case for real estate hasn't. In an exclusive interview with TheStreet, Meyer made a direct argument: the math still favors real estate, even after stripping out the asset's most-cited advantage.

"All these things still create a return that I believe will average better than the S&P 500 going forward, even without appreciation," Meyer told TheStreet.

Real estate vs. S&P 500 decision in 2026

Meyer's argument starts with a reframing that runs counter to how most real estate cases are made. Rather than leading with appreciation - the rising home value that has historically carried favorable narratives around real estate investing - Meyer focuses on the four returns investors can actually control: cash flow, tax benefits, amortization, and principal paydown. Those four pillars, he says, are why real estate still holds an edge.

"Think about things that you can control, like cash flow. Think about tax benefits, amortization - all these things still create a return that I believe will average better than the S&P 500 going forward, even without appreciation," Meyer told TheStreet. "And if you get appreciation, great. That's a bonus on top of everything that you're already doing."

This framing removes the most volatile variable from the equation. Appreciation is what investors have spent the last several years either celebrating or worrying about. The COVID-era surge made everyone a winner, while the cooling in 2026 has created opposite headlines. Meyer's argument sidesteps this volatility. If the four pillars produce returns above the S&P 500 average without appreciation factored in, then home value movement becomes upside, rather than the foundation.

As Meyer also pointed out, this is not new framework.

"A lot of investors I talked to who were around during earlier decades told me they never factored in appreciation into their calculations in the first place," he said. "And I think that's a wise course of action for investors in today's day and age."

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When discussing unrealistic expectations many current real estate investors have, Meyer often refers to what he calls "The Goldilocks era" of 2013 to 2023. The rising home values, low rates, and cheap money that produced unusually strong returns in this 10-year window were the exception.

Investors operating before that period built wealth on the structural advantages of real estate ownership, not on the assumption that prices would keep climbing. In a 2026 market that more closely resembles those earlier conditions, Meyer's argument is that the same fundamentals can produce the same results.

More decision framework for Americans weighing real estate in 2026

If Meyer's framework holds, the housing market shift doesn't change the long-term math for Americans deciding between investment strategies. While lower investor sentiment, higher rates, and softer prices make real estate investing different than a few years ago, Meyer says these conditions do not make the S&P 500 a better long-run alternative for capital that would otherwise go into property.

The decision Americans face isn't between a struggling asset and a winning one, but rather two different return profiles. Meyer's argument is that real estate's controllable returns still come out ahead.

The S&P 500's recent strength has made a case for pulling money off the housing sidelines, and the temptation to chase stock market returns is rational given the conditions. And as he often makes clear on the BiggerPockets Real Estate podcast, Meyer does not believe real estate is the only viable wealth-building vehicle. That said, his case for real estate investing outperforming the S&P 500, even in 2026, is that the pillars of real estate all produce returns that don't require markets to cooperate.

"I also think it's a great hedge against inflation, which we're starting to see," Meyer said of real estate investing. "And so there is good opportunity to protect your money as well. And these are the core ideas - inflation hedge, principal paydown, tax benefits, cash flow. That's what's always made real estate a strong investment, and it still can in today's market."

Key takeaways for real estate investors in 2026

• Real estate can outperform the S&P 500 even without appreciation: Per Meyer, the controllable returns of real estate - cash flow, tax benefits, amortization, and principal paydown - are enough to beat stock market averages over the long run, with appreciation acting as a bonus rather than the foundation of the case.
• Earlier generations of investors never factored in appreciation: Meyer says earlier investors treated appreciation as upside, not as the basis of their math. That approach fits today's conditions better than the post-COVID playbook.
• Real estate also functions as an inflation hedge: With the CPI jumping, hard assets like real estate have a structural role most stock allocations don't.
• Housing market shift hasn't changed long-term math: Investor sentiment has dropped, but Meyer says the underlying case for real estate as a long-term investment remains intact.

Related: Americans get blunt message on potential housing market crash

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This story was originally published May 2, 2026 at 4:41 PM.