REITs and Inflation: The Recent Performance of REITs During the Periods of Varying Inflation
Open Access
Author:
Patel, Yash
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Eva Steiner, Thesis Supervisor Brian Spangler Davis, Thesis Honors Advisor
Keywords:
REIT REITS Real Estate Real Estate Investment Trust Inflation Hedge Asset Returns CPI Consumer Price Index Regression OLS Ordinary Least Squares Private Public Investment Investing Correlation Market Stocks Trading
Abstract:
As the world economy began to reopen, and a sense of normality returned to many parts of the world, a new threat to the economy emerged, inflation. Since early 2020, inflation in the United States has consistently been well above the Federal Reserve’s (FED) target inflation rate of 2%. This has led to many investors and individuals alike looking to hedge their bets against inflation. Traditional convention points to real estate as a hedge against inflation. This logic follows as the Consumer Price Index (CPI) heavily weighs housing in its price-level indication. However, is this really the case? In this paper, we examine the literature concerning real estate as a hedge against inflation. We specifically look at Real Estate Investment Trusts (REITs) and how they fair during periods of varying inflation and if they differ greatly from traditional stocks. Lastly, we extend the current research and present findings of REIT performance through 2020 and since the inflationary environment began with the pandemic.
