Article
The impact of housing on a homeowner's investment portfolio
Financial Services Review
(2012)
Abstract
We examine the inflation hedging and portfolio enhancing properties of residential real estate that makes up a significant part of the individual homeowner-investor's investment portfolio. Using 22 S&P/Case-Shiller city-level and composite indices, we show that residential real estate is at best a modest hedge against inflation. Adding residential real estate can potentially enhance the mean-variance efficiency of portfolios made up of financial assets such as stocks and bonds. However, to take advantage of the diversification benefits of residential real estate, homeowner-investors must rebalance their portfolios periodically, which may not always be a practically feasible option.
Keywords
- Impact analysis,
- Investment plans,
- Inflation,
- Hedging,
- Studies,
- Housing
Disciplines
Publication Date
2012
Citation Information
Vivek Pandey and C. Y. Wu. "The impact of housing on a homeowner's investment portfolio" Financial Services Review Vol. 21 (2012) p. 177 - 194 Available at: http://works.bepress.com/vivek-pandey/11/