Can I get similar returns by buying mortgage-backed securities, home builder stocks or other rental properties?
None of these other investments have the same return patterns (absolute return, correlation with other asset classes, and volatility) as single-family housing. Mortgage-backed securities provide debt returns, not equity returns. Home builders primarily provide exposure to development and manufacturing-type risks. Multi-family funds are the most closely related asset class, but long-term data shows a different return pattern. Measured against the NCREIF apartment index since 1978, single-family housing has had higher returns, experienced lower volatility, and been far less correlated with equities. What is the impact of changes in inflation and interest rates on returns?Single-family housing is likely to benefit from an increase in inflationary expectations—residential real estate is a very strong inflation hedge. Of course, higher inflation is typically accompanied by an increase in interest rates, but a growth in property prices would likely offset any increase in borrowing costs driv
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