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Rental and Median Home Price

Rental and Median Home Price

Source: Horizon Kinetics; St. Louis Fed, Bloomberg, Factset

This picture piggybacks on the image below that shows annual inflation in the US per year going back to 1960.

The focus on this picture is the devastating effect that inflation can have on financial assets like stocks if the annual inflation rate exceeds the nominal return of the asset.

From 1973-1982, when the annual rate of inflation had certain years during that period of double digits, the S&P 500 had an annual return of 1.8% before inflation or a cumulative return during this period of 19.1% before inflation.

But after inflation was factored in the annual return was -6.5% per year and the cumulative return for this period after inflation was -48.8%.

Real estate on the other hand did much better than the S&P 500 with a 9% annual increase for home prices and a 7.4% annual increase for rentals.

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