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A New Kind of Gold? Investment in Housing in Times of Economic Uncertainty
Susanne Trimbath and Juan Montoya
June
2002
Price:
$ 10.00
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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, Americans now appear to be treating the purchase of residential real estate as the investment of choice in times of economic uncertainty. This paper discusses 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.
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