Real estate prices may not beat inflation over time, but real estate as an overall investment probably does once you figure in rents. Even in today’s grossly overpriced market, few homes are selling at more than 25 times yearly rent, meaning that they have a “rental dividend” of at least 4%. So the long-run average is probably closer to 6-7%. In comparison, I think the average S&P500 stock pays a dividend of around 2%. Plus if the real-estate is owner occupied, that dividend is tax free.
