They mean essentially the same thing — land and whatever is permanently attached to it. Real estate is the standard modern term, especially in the US property market. Realty is older, more legal in flavour, and now survives mainly in company names. Neither is more correct.
The core difference
Two words for the same category of property, split by register rather than meaning.
- real estate — the everyday and commercial term.
- realty — older, more legal; common in business names.
- real property — the precise legal term, contrasted with personal property.
Why "real" at all
Nothing to do with being genuine. It is from Latin res, thing — via the legal distinction between real actions concerning the thing itself (land) and personal actions concerning a person. Land could be recovered as the thing itself, which is what made it "real".
Related term
Realtor is not simply a property agent — in the US it is a trademarked designation for members of the National Association of Realtors, which is why publications capitalise it.
