Photo by Brandon Griggs on Unsplash

Investors sometimes depend on residential property to balance a portfolio. According to Zillow Group Inc. (NASDAQ:ZG), the U.S. real estate market was estimated at around $49.3 trillion in 2018. The residential market represented $33.3 trillion of that total and the commercial market $16 trillion. Total equity capitalization in the U.S. stock market stood at $30.4 trillion.

According to a Stanford University study, residential real estate is historically an investment safe haven during inflationary periods. The study also found that with the inflation of the 1970s, home prices increased relative to the size of the economy.

“Owners of residential and commercial real estate are often better off during rapid inflation than owners of stocks or bonds, economists say,” according to a report by  News Corp.’s (NASDAQ:NWSA) Wall Street Journal. “Office, retail and apartment rents are typically tied to consumer prices and rise with inflation, pushing up property income. Inflation also makes construction more expensive, which benefits property owners because they can expect less competition from new buildings.”

The bottom line of this investment scenario is that real estate investment may be able to help diversify your portfolio while hedging your risk against the stock market. This makes real estate a potentially safer investment option than a continually volatile stock market. The risk of putting your own money to invest can also be minimized as real estate offers multiple financing options. Investors have also traditionally financed their real estate purchases by applying for a loan.

JPMorgan Chase & Co. (NYSE:JPM) predicts that the year ahead looks positive, with retail and multifamily asset classes rebounding and industrial thriving. The company also points to commercial real estate finding innovative ways to increase the affordable and workforce housing supply. 

AKRU CEO and Founder Mohsin Masud told Cincinnati Future what he believes makes his company unique. “Some of the biggest differentiators between us and crowdfunding platforms is the fact that we’re not just doing initial offerings. We make available a secondary market, which is key because that will potentially enable investors to add liquidity to a more illiquid asset class. So now, not only can you buy into real estate at 1,000 bucks, but you can also buy, sell and trade that after a 90-day hold period or so. That’s a major differential.”