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| The Inflation-Hedging Effectiveness of
Real Estate Author: Jack H. Rubens, Michael T. Bond, and James R. Webb Start Page: 45 Abstract: Inflation has become
one of the predominant financial concerns of the late twentieth century. In the late
1970s, public opinion polls ranked inflation as the number one problem in the United
States. While the rate of inflation has slowed since the late 1970s, inflation is still
present and many investors expect a resurgence of inflation to higher levels in the near
to immediate future. This continued concern about inflation has led to an increased search
and evaluation of investments that will protect investors from inflation. Assets that have
the ability to protect investors from the effects of inflation are generally labeled
inflation hedges. Real estate has been regarded as one of the best inflation hedges of
past years. While there has been research in the past evaluating this possibility and some
recent research using only business real estate, no current research on residential real
estate or farmland as inflation hedges exists. This study examines the inflation-hedging
effectiveness of residential real estate, farmland, and business real estate (with a
different data set) as individual assets and in a portfolio context for 1960-86. |
