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Real estate remains the leading long-term investment choice for the third year in a row according to a new Gallup survey.

“Both the housing market and the stock market have recovered from catastrophic losses suffered in the last decade,” said Gallup, “with average house prices and the Dow well above their pre-crash high marks. But Americans have been much more likely to regain confidence in real estate than in stocks as "the best" long-term place to invest their money. The split between the two investment options grew again in the last year as the stock market's volatility increased investors' concerns.”

The Gallup study showed that 35 percent of all Americans see real estate as the best long-term investment option. The real estate results compare with 22 percent for stocks and mutual funds, 17 percent for gold, 15 percent for savings accounts/CDs and 7 percent for bonds.

The huge importance given to real estate is surely understandable if it is considered as everything but an investment. A home represents a tangible accomplishment, it's an index of not only our personal wealth but our individual taste. It has dimension, it's tactile – you really can reach out and touch it – and most of all it reflects our ego and who we are. While shares of stock and gold bars may be identical the same is not true with real estate. It's technically a nonhomogenic commodity, a fancy term which means that no two pieces of property are like.

But while real estate may have many social and psychological values the Gallup survey did not ask about such things. Instead the pollsters wanted to know about investment options and when it asked that question it was real estate that came out on top.

Why Real Estate Is A Favored Investment

Why is it that real estate is thought of so highly?

There is no universal answer but surely there are three factors which impact the status of property ownership as an investment.

First, real estate is a controllable asset. You as the owner can buy, sell, rent, or paint the inside puce if you elect. Alternatively, if you own a thousand shares of Microsoft Bill Gates is not on the phone asking for your opinion about the latest version of Windows.

Second, if the value of your home rises you get a benefit in the form of more equity plus it's still a place that you can live in or rent. If the value falls you still have somewhere to live as long you make your monthly payments plus you have the opportunity to rent the place if you like. This is important because unlike stocks or bonds, real estate has a utility value, you can live in it or rent it.

Third, real estate is the last opportunity for most people to make a substantially leveraged investment. A qualified buyer can readily purchase a home with 3.5 percent down through the FHA mortgage program. First-time purchasers can get financing with just 3 percent down from Freddie Mac (Home Possible) and Fannie Mae (HomeReady) while millions of buyers have financed with nothing down through the VA program.

What these programs tell us is that it's possible to have enormous leverage with real estate – 33-to-1 in many cases. What other financial opportunity with equal risk offers such leverage and is so widely available?

Tax Benefits Fade

However, because of low mortgage rates one traditional real estate attraction has been diminished.

You can't get a deduction for credit card spending or auto loans but mortgage interest, property taxes, and mortgage insurance are generally deductible from federal taxes.

“The effect of these deductions is to make real estate ownership more attractive and affordable,” said Rick Sharga, executive vice president at Ten-X.com, an online real estate marketplace. “If you combine the value of property deductions with the impact of inflation the net result can be financing with an effective cost that is pretty close to zero.”

Renters don't have such deductions but with changes in interest rates and the tax code the traditional financial advantages of homeownership may be eroding. For example, in 2007 the standard deduction was $5,330 if single and $10,700 if married. By 2015 the same deductions were $6,300 and $12,600.

Meanwhile, while the standard deduction was going up, real estate write-offs were largely going down. Housing debt in the US totaled $8.74 trillion at the end of 2015, a substantial drop from the $9.75 trillion in mortgage debt that was owed in the fourth quarter of 2007, a trillion-dollar drop.

Not only is there less debt, the interest on that debt has fallen substantially. The typical mortgage rate in 2007 was 6.34 percent versus 3.85 percent in 2015. Not only that, but by refinancing many people are able to get rid of mortgage insurance costs. Combine less debt with far-lower housing expenses and the result is that a growing number of homeowners are using the standard deduction, just like renters.

Will real estate continue to be a favored investment in the future? For what it's worth the view here is yes because, after all, what other investment provides so much shelter in a storm, whether the storm is physical or financial?