Workforce housing: The segment can serve as an investment buffer during recessionary times

IREI (INSTITUTIONAL REAL ESTATE, INC)

APRIL 1, 2023: VOL. 35, NUMBER 4

BY CHRIS MARSH, REVITATE CHERRY TREE

Increases in the target federal funds rate have continued into 2023, though smaller than in 2022, reflecting the comments of Federal Reserve Chair Jerome Powell in a Nov. 30, 2022, speech, when he indicated smaller rate hikes are likely ahead for 2023. He also acknowledged the frequency of hikes would continue until inflation growth slows.

Continued rate hikes could mean a potential economic downturn. And this potential is prompting investors to rethink their investment strategies and portfolio construction. Some are focused on defensive actions, like buying more blue-chip equities and bonds. Others are zeroing in on alternative investments such as real estate as a potential inflationary hedge.

While real estate, broadly speaking, is a strong asset category to withstand inflation, not all types of real estate are created equal. In truth, some property sectors are more recession-resistant than others. Workforce housing, in particular, has proven attractive, not only as an ideal defensive strategy on inflation but also as a pathway to diversification and long-term growth…