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Essay / Research Paper Abstract
A 4 page overview of the relationship which exists between levels of inflation and the real estate market. Using examples from the 1970s and 1980s the author presents the case that while some arms of the real estate market can benefit from times of high inflation, arms such as real estate investment trusts that benefit from rising rent, other arms are negatively impacted. High inflation puts real
estate outside the economic grasp of the majority and into the control of the few. Bibliography lists 3 sources.
Page Count:
4 pages (~225 words per page)
File: AM2_PPinflat.rtf
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Unformatted sample text from the term paper:
stable of all markets. This market can fluctuate, however, in accordance with a variety of factors. One of these factors is inflation. That means that the numerous facts
that affect the rate of inflation also affect the real estate market. These include factors such as the unemployment rate, inflation, trade structure and the domestic and foreign exchange,
and the financial market. While some arms of the real estate market can benefit from times of high inflation, arms such as real estate investment trusts that benefit from
rising rent, other arms are negatively impacted (Waggoner, 2000). While high rates of inflation make it possible to net greater profits over a shorter period of time, it also
puts prices so high that many cannot afford them. It can be contended, in fact, that high inflation puts real estate outside the economic grasp of the majority and
into the control of the few. The transition that occurred between the 1970s and the 1980s is particularly interesting from a real estate
perspective. Unemployment was at an all-time high and wage costs were staggering (Waggoner, 2000). As a consequence, the real estate market faced many challenges. As Waggoner (2000)
notes, real estate funds remain an investor stronghold during times of high inflation such as those characterizing the 1970s. He contends:
"Real estate is a traditional hedge against inflation. Real estate investment trusts (REITs) that invest in apartments and offices can gain from rising
rents. In areas like Boston, New York and San Francisco, they can benefit from tight supply" (Waggoner, 2000).
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