Home Analytics Part 2: Home Price Index

Brodie Gay, MFE – Quantitative Strategist Introduction In the previous article Home Analytics Part 1: Long Run Returns, we developed a method for estimating long-run average real estate returns. While this is a useful anchor for our expectation of future performance, we may be interested in a higher resolution, period-by-period view of the real estate market.  Specifically, what if we …

2017: End of Year US Residential Real Estate Review

Brad Lookabaugh – Quantitative Portfolio Manager Download a PDF of this report here. Slow and steady The latest S&P/Case-Shiller report showed home prices are continuing their steady climb, with the national index increasing 6.2% year-over-year for September 2017. Data for the first nine months of the year have now been released[1] and the index shows a year-to-date gain of 4.2%. …

Inflation and its Impact on Real Estate

Download our latest whitepaper here. The paper was authored by Brodie Gay, Brad Lookabaugh, and Rayan Rafay. Executive Summary A scale is a sacred symbol. It represents balance, justice, and accuracy. Over thousands of years, societies have come up with agreed-upon units and measures for concepts as varied as temperature, weight, and space. While economic measures have benefited from the …

Home Analytics Part 1: Long Run Returns

Brodie Gay, MFE – Quantitative Strategist Introduction In this Home Analytics series, we will develop a toolbox of statistical methods to help analyze the home as a financial asset.  We begin by estimating expected risk, returns, and correlation to other asset classes. Later, we will explore applications of our estimates as they related to the financial decisions of households, investors …

Are your nest eggs all in one basket? Managing concentration risk in personal wealth

Andrew Toby CFA – Director, Investment Operations The Unison Solution – Vol. 1 Are your nest eggs all in one basket? Managing concentration risk in personal wealth In this series of blog posts entitled “The Unison Solution,” we aim to provide objective analysis of the various use cases of the Unison program offering.  In this inaugural post, we will explore …

When you invest in real estate funds, fees matter.

Rayan Rafay, CFA – Managing Director, Head of Portfolio Management Institutional investors have been focused on real estate since the early 1970s, a time when many factors converged that compelled institutional investors, particularly pension funds, to begin investing in the asset class.  The first real estate commingled fund was offered in 1968, and with the passage of ERISA in the …

Sunshine and residential real estate

Krishanu Nandy, Ph.D. – Quantitative Strategist “All the leaves are brown and the sky is gray. I’ve been for a walk on a winter’s day. I’d be safe and warm if I was in L.A., California dreamin’ on such a winter’s day.” – The Mamas and The Papas Earlier this year, Chicago’s stretch of 8 days without sunshine (January 21st …

The Devil is in the details: risk and return in residential real estate

Brodie Gay, MFE – Quantitative Strategist   Executive Summary: Residential real estate equity is one of the largest asset classes in the United States and is a significant proportion of the average household’s net worth.  We study how diversified real estate indices lead to a dramatic understatement of the median homeowner’s portfolio risk (by a factor of 4-5x).  Finally, we …

Why institutional investors need to invest in residential real estate

Rayan Rafay, CFA – Managing Director, Head of Portfolio Management  With over $71 trillion USD in assets under management[1], institutional investment is a core driver of the global economy.  Institutional entities have the common objective of generating cash flows capable of fulfilling future obligations.  These obligations fluctuate with respect to economic factors such as interest rates, inflation, and unemployment rates.  …