A very self-serving survey by TD Ameritrade discussed in the article [Speculators Start To Eye Stocks As Home Sales, Price Gains Slow [IBD]](http://www.investors.com/editorial/IBDArticles.asp?artsec=5&issue=20060411) but it provides food for thought.
Guess whether the survey favors the stock market or real estate?
A recent TD Ameritrade survey asked several questions of investors, including “What is the best type of long-term investment?” — real estate or stocks. Those picking real estate peaked in July, with 48% of investors favoring housing vs. 32% for stocks. That came as many real estate stocks and home prices in many markets topped.
The following seven months showed a shift back to equities, with stocks edging past real estate as the preferred investment choice in February — 40% vs. 38%.

The results would appear to be bias and thin but a good point is made. With inventory and mortgage rates rising, investors might start looking toward the stock market in search of returns on par with real estate seen over the past 5 years. This is not to say the current stock markets are at the point were their returns are better than real estate, but perhaps, the risks are lower. Its something to consider.
On one hand, the exit of speculators could be reduce some of the volatility in pricing, mostly by easing upward price pressure.
However, the loss of transaction volume would reduce overall demand in markets heavily dependent on speculators resulting in a significant drop in the number of sales and an eventual drop in prices. Markets with limited investor activity may not see much of an effect at all.
Note: In an ironic twist, Manhattan, with its limited exposure to speculators and dependence on Wall Street, would likely benefit from this transition when and if it occurs. More churn in the stock markets generate more income to Wall Street firms, which generates more bonus income to its employees, which generates more disposable income to purchase real estate. [self-fulfilling logic -ed]