Billionaire investor and Bridgewater Associates founder Ray Dalio has cautioned that real estate may not be an effective investment in 2025, warning the sector could struggle to deliver strong returns.
According to Dalio, the current economic climate makes property ownership less attractive compared to other investment options.
In an X post on August 11, he pointed to the asset’s heightened sensitivity to interest rates, noting that rising or elevated rates could erode values in real terms despite persistent inflation concerns.
Dalio also highlighted the tax burden as a key drawback. Since real estate is a fixed and tangible asset, it is easier for governments to tax, which can eat into investor returns and limit its role in portfolio diversification.
In addition, he argued that property’s immovable nature restricts investors’ ability to reallocate capital quickly in response to changing market conditions, a flexibility he believes is essential in today’s fast-shifting global economy.
U.S. housing markets showing weakness
Dalio’s outlook comes as the U.S. housing market shows troubling signs. For instance, data shared by Barchart on August 6 indicated the market hit a historic imbalance in June 2025, with home sellers outnumbering buyers by more than 500,000, the widest gap ever recorded, according to Redfin.
Figures show there were approximately 1.92 million active sellers compared to just 1.41 million buyers, marking a surplus of 508,715 homes on the market. This sharp divide reflects a shift from the intense seller’s market of recent years, when demand far outstripped supply.
Analysts argue that the record gap signals a cooling market, driven by high mortgage rates, affordability challenges, and economic uncertainty, which have sidelined many potential buyers.
Meanwhile, Dalio has recently expanded his warnings beyond real estate, cautioning that the U.S. and global economies could face “something worse than a recession” amid breakdowns in monetary, political, and geopolitical systems.
He argued that without fiscal reforms, notably cutting the federal deficit to around 3% of GDP, the U.S. could face a debt supply-demand crisis with consequences worse than a typical downturn.
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