Mastering the metropolis through research and thought leadership.
Working Papers

Connecting the Disconnect

Working paper #456
Bernard Winograd

To outsiders -— still far more numerous than insiders -— real estate investing has never seemed particularly attractive. Where insiders see obvious progress, outsiders see things that have always been problematic about real estate investing. However, the attractive returns and diversification value of real estate are hard to ignore. This article reviews the traditional argu-ments for real estate: first, real estate has been proven to be a good diversifier of portfolios, one that lowers volatility of results in a way that enhances risk-adjusted return; second, real estate is an income generator; and third, because of important changes in the industry over the past decade, liquidity and transparency are up, cyclicality is down, and leverage is lower. The range of returns from top to bottom quartile in real estate investing has been similar to those from equities, and the overall returns have been comparable. Real estate today looks like a decent relative bet, given where the other major asset classes are starting.

Download full paper · 1MB PDF


In This Section
Explore Topics

1010 Affordable Housing Amazon Amenitization Architecture Artificial Intelligence Asia Australia automation Autonomous Vehicles bonds Borrowing Constraints Brexit California Canada Capital Business China Co-Working Environment coastal markets cold storage Colombia Commercial Brokerage Commercial Real Estate commissions Congestion consumer bias covid-19 CRE credit card market Credit Default Swaps Credit Insurance Credit Risk Transfers Culture Data Analytics data centers Data Collection Technology Debt Market Demand Demographics Density Development Discrete Choice disruption Diversity drones e-Commerce Economic Corridors economic policy economics education election studies Equity Funds Equity Market Ethnic Factors Europe Fannie Mae financial asset management Foreclosures Foreign Policy France Freddie Mac general equilibrium Global global economy Global Financial Crisis Globalization great depression Great Recession healthy buildings Hedonic hospitality Housing & Residential housing boom Housing Disease housing prices Housing Supply Identity Income Inequality India inflation Inter-generational mobility interest rates Investing jobs labor market Lagging Regions land use regulation Language life sciences Macroeconomics malls Market Pricing megacities Microeconomics Migration Minimum Payments Mixed-Use Mobility moral hazard mortgage insurance mortgage market Mortgage Rates Mortgages Multi-family Nation Building Non-Traditional Mortgages Office Market office sector pension funds Placed Based Policies Political Risk Price Discovery Private Equity Business public health public policy Public Schools real estate brokerage Real Estate Investment Real Estate Investment Trusts Recession Rental Retail Retirement reverse mortgages Risk Adjustment risk management risk-shifting robotics single family housing Slums Sorting South America Spatial Regions spillover effect stimulus package Sub-Prime Mortgages Supply Chains Sustainability Technology telecommunications trade transportation unemployment United States Urban Urbanization Warehouse welfare work from home

arrow_drop_up