With the economy feeling a bit unpredictable lately, the stock market has been more volatile than usual. If you've been keeping an eye on your 401(k) or other investments, you might have experienced that uneasy feeling in your stomach. One day the market seems to rise, and the next day it falls, which can understandably cause some concern about your financial situation.

If you’re a homeowner, there’s something important you should keep in mind. According to Investopedia:

““Traditionally, stocks have been far more volatile than real estate. That’s not to say that real estate prices aren’t ever volatile—the years around the 2007 to 2008 financial crisis are just one memorable example—but stocks are more prone to large value swings.”
”

— Investopedia

Home values tend to be more stable compared to the ups and downs you might experience with stocks or your 401(k).

A Drop in the Stock Market Doesn’t Mean a Crash in Home Prices

Check out the graph below. It illustrates how home prices (represented by the blue bars) changed during various stock market swings (depicted by the orange bars).

Even when the stock market takes a significant dip, home prices don't always decrease at the same rate.

Significant drops in home prices like what we saw in 2008 are rare occurrences. Most people remember that time well. The stock market crash back then stemmed from relaxed lending, subprime mortgages, and a surplus of homes—none of which are present in today's market. This is what sets the current situation apart.

Home values have often increased even when the stock market has declined, demonstrating that real estate tends to be much more stable.

This graph illustrates the fluctuations in stock prices, represented by the orange line, which can swing by over 30% within a year. In comparison, home prices, depicted by the blue line, tend to change at a slower pace (refer to the graph below).

Stock prices tend to fluctuate quite a bit more than home prices. One day, you can see a significant increase, and the next, you might face a sharp decline. In contrast, real estate generally doesn't experience those kinds of extreme movements.

That's why many people find real estate to be a more stable and less risky option compared to the stock market.

If you're feeling anxious about the recent fluctuations in your stock portfolio, you can take comfort in knowing that your home probably won't face the same level of volatility.

Homeownership is often seen as a solid long-term investment. Even if the current situation seems uncertain, homeowners tend to come out ahead over time.

Bottom Line

Many people are feeling anxious about their finances these days. However, there's a strong reason to feel more at ease—your investment in real estate, an asset that has proven its resilience over time.