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| Real Estate Returns and Inflation: An Added
Variable Approach Author: Michael T. Bond and Michael J. Seiler Start Page: 327 Abstract: This study analyses
the inflation hedging effectiveness of residential real estate over the 1969–94
period. The results indicate that residential real estate is a significant hedge against
both expected and unexpected inflation. These results indicate that since financial assets
are not good inflation hedges in periods of high unexpected inflation, including real
estate in a portfolio should decrease the variance of the portfolio returns. These results
were made possible by the use of the Added Variable Regression Method (AVRM), a measure
which has yet to be employed in this context. There are nine variables included in the
AVRM framework which are also found to have significant explanatory power relative to
residential real estate returns. |
