The Journal of Real Estate Finance and Economics

, Volume 1, Issue 4, pp 347–372 | Cite as

Owner-occupied homes, income-producing properties, and REITs as inflation hedges: Empirical findings

  • Joseph Gyourko
  • Peter Linneman


New evidence on the correlation patterns of various real estate returns with inflation is presented. Returns on a wide array of real estate, nonresidential as well as residential, are investigated. Stock and bond returns are also analyzed for comparison purposes. Extensive heterogeneity is found in real estate return correlations with inflation. Nonresidential property returns are most strongly positively correlated with inflation, although the appreciation in owner-occupied homes is also positively associated with inflation. However, REIT returns tend to be strongly negatively correlated with inflation. In this respect, they look more like traditional stocks and bonds than any other type of real estate. Finally, new evidence on return correlations with energy prices is also presented. Nonresidential real estate performs best here, too, although no real estate asset fully compensates investors for adverse energy price shocks.

Key words

Inflation hedge Nonresidential real estate REITs 


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Copyright information

© Kluwer Academic Publishers 1988

Authors and Affiliations

  • Joseph Gyourko
    • 1
  • Peter Linneman
    • 2
  1. 1.The Wharton SchoolUniversity of PennsylvaniaPennsylvaniaUSA
  2. 2.The Wharton SchoolUniversity of PennsylvaniaPennsylvaniaUSA

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