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Traditionally, houses (mortgages) are usually considered as a hedge against inflation.
by aynyc 5y ago
Traditionally, houses (mortgages) are usually considered as a hedge against inflation.
- xapata 5y agoSorta. They're a hedge against low real returns in the stock market, which is slightly different than inflation by itself.
- aynyc 5y agoMy macro economic understanding is that real estate is a debt that hedge against inflation. Since inflation will cause raising cost, your mortgage is locked in while cost of everything is going up. Inflation punishes savings but help debtors.
- xapata 5y agoYes, but if inflation also pushes up asset prices, you might have been better off investing in the stock market.
- imtringued 5y agoThey don't protect against a war though. The importance of this is a bit difficult to understand because political inaction can cause a situation where there are no good solutions left but the population is angry and wants to take that anger out on someone. Prominent example: The nazis came up with an anti semitic conspiracy.
- aynyc 5y agoI mean, nothing protects you from act of war or act of god. But that’s not what we are talking about here right? Risk of inflation in peacetime is something BlackRock has to considered. I’m not saying they are right or wrong, just that real estate is a hedge play as far as I can tell.