As a financial investment, choosing between real estate and stock holdings can be like selecting chocolate or vanilla ice cream; it depends on your mood and taste buds. Comparing real estate investments against stock holdings can be complex when you factor in tax rates, tax deductions, borrowing rates, income from interest and dividends and more.

In Steamboat, over half of the real estate is owned by second home owners or investors, meaning a strong stock market buoys real estate values. Many local investors use funds from stock market gains to acquire real estate. When the stock market plunged 54% between October 2007-March 2009, home values in Steamboat followed suit, though not at that extreme, decreasing in value by 40% during the following years, bottoming out in April of 2012.

Currently, the Dow Jones stock market index is up 12%, while Steamboat Springs median single family home values have increased by 21% and condos/townhomes have increased by 8%. When you factor in tax deductions for real estate loans and income from rentals, the overall value of real estate investments have been a strong investment. No doubt, historically low interest rates are creating a welcoming borrowing environment for real estate investors.

“Although the rate environment matters, the most important factor is the capitalization rate of an investment property, which is affected by the property’s net operating income or cash flow, and the price of the property,” says Jeff Minotto, commercial lender at Mountain Valley Bank. “Good real estate investors and good investments can make money in high and low rate environments.”

Many investors find the easy liquidity and passive nature of investing in stocks appealing, while others enjoy the hands-on approach needed when owning real estate. Real estate investors often appreciate searching for properties to acquire at a good value, often a challenge for the average stock picker. Ultimately for investors the real estate vs. stock market debate boils down to what flavor tastes best.