Question

Why is a home a good inflation hedge? Should a home be included as an asset if its occupants aren’t sure they could sell it?

Answer 1

Inflation is a general increase in prices and fall in the purchasing value of money.

So it means a person will be able to purchase less with the same amount of money he had before.

An inflation hedge:
Normally involves investing in an asset expected to maintain or increase its value over a particular period of time.

During the period of inflation the house is proved to be one of the safest hedge against inflation.

Because house price tends to go higher and with that rent also goes higher hence hedging us from loss of our purchasing power.

Asset meaning:
property owned by a person or regarded as having value and available to meet debts, commitments, or legacies.

So even though a person is not sure he will be able to sell his house he need to invest in atleast 1 house as an asset because it protects them from inflation, provides security.

The disadvantage of home or most real estate is that they are Highly illiquid. Which makes them difficult to sell.

At the same time it's keeps volatility and value in check.