A New Kind of Gold? Investments in Housing Under Economic Uncertainty

14 Pages Posted: 19 Jul 2002

See all articles by Susanne Trimbath

Susanne Trimbath

STP Advisory Services, LLC; Creighton University, Department of Finance and Economics; Bellevue University - College of Business

Juan Montoya

Milken Institute

Date Written: June 2002

Abstract

Since the 1960s, Americans have looked to the stock market for investments. Residential real estate was just a place to live. No more. Much like gold in the 1970s, the purchase of residential real estate now appears to be treated by Americans like the investment of choice in times of economic uncertainty. This paper shows that there are two reasons for this major behavioral change.

First, real estate has become the psychological equivalent of gold, the asset considered most tangible and therefore, rationally or not, the safest. Second, the timing of the shift in real estate investment patterns suggests that the change is a side effect of the stimulative monetary policy used during economic recessions. Reduced interest rates encourage investment in real estate by making it more affordable.

Keywords: Real Estate, Investment Allocation, Property, Economic Uncertainty

JEL Classification: E21, R21, R31

Suggested Citation

Trimbath, Susanne and Montoya, Juan, A New Kind of Gold? Investments in Housing Under Economic Uncertainty (June 2002). Available at SSRN: https://ssrn.com/abstract=316704 or http://dx.doi.org/10.2139/ssrn.316704

Susanne Trimbath (Contact Author)

STP Advisory Services, LLC ( email )

PO Box 1252
Bellevue, NE 68005
United States
4029328888 (Phone)

HOME PAGE: http://www.STPAdvisors.com

Creighton University, Department of Finance and Economics ( email )

United States

Bellevue University - College of Business ( email )

United States

Juan Montoya

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States
310-570-4612 (Phone)

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