Monetary policy and real estate returns

Previous research established that Federal Reserve monetary policy influences stock, bond, and other financial asset returns. This research extends past research and shows that similar patterns exist for real estate returns. We also provide evidence consistent with the contention that returns to underlying real estate are less sensitive than stock returns or securitized real estate returns to changes in monetary policy conditions. Investing in real estate may provide a hedge against changes in the monetary environment; however, investing in REITs represents an ineffective method to capture this benefit. Copyright Springer 2000