U.S. Real Estate Market: Asset Value Data 2021 To 2024

Market Overview

The U.S. real estate market represents one of the most dynamic and diversified sectors of the national economy, encompassing residential, commercial, industrial, and special-purpose properties. It serves as a fundamental pillar of economic activity, contributing significantly to GDP, employment, and household wealth. The sector’s performance is intrinsically linked to macroeconomic indicators such as interest rates, inflation, demographic trends, consumer confidence, and fiscal and monetary policy.

Over the past decade, the U.S. real estate market has undergone profound structural transformations, shaped by shifts in population dynamics, technological advancement, institutional capital flows, and evolving preferences in space utilization. In recent years, the market has exhibited both resilience and volatility. The residential segment has seen periods of accelerated appreciation fueled by constrained supply, historically low interest rates, and heightened demand, particularly in suburban and secondary markets. Meanwhile, the commercial real estate (CRE) segment has experienced a more nuanced trajectory, with asset classes such as industrial and multifamily outperforming, while office and retail assets have contended with structural headwinds.

Valuation dynamics within the U.S. real estate market have been shaped by a confluence of macroeconomic factors, sector-specific fundamentals, and evolving investor sentiment throughout recent periods. Following a phase of robust price appreciation during the preceding economic expansion, valuations have entered a period characterized by cautious recalibration amid tightening financial conditions and shifting market fundamentals.

Capitalization rates across major property sectors have experienced modest upward pressure, reflecting a recalibration of risk premiums in response to rising interest rates and increased cost of capital. This shift has translated into a more discerning valuation environment, with investors placing heightened emphasis on asset quality, location, and income stability. 

Valuation In The U.S. Real Estate Market: Methodological Rigor And Market Practice:

Real estate valuation, as a critical component of investment analysis, portfolio management, and credit underwriting, must be contextually calibrated to reflect the idiosyncratic risk-return profiles, lease structures, operating models, and capital market expectations specific to each asset class. The increasing sophistication of investors, expansion of non-traditional asset types, and growing influence of macroeconomic volatility have necessitated a highly nuanced, sector-specific approach to valuation in the U.S. real estate market.

U.S. Real Estate Market, Asset Value, By Property Type, 2024 (USD Billion)

Multifamily Apartments

Multifamily properties, particularly stabilized core and core-plus assets, are typically valued using the Income Capitalization Approach, with an emphasis on both Direct Capitalization and DCF methodologies. Key valuation inputs include market rent assumptions, renewal probabilities, tenant turnover costs, operating expense load, and capital expenditure reserves. Given the granularity of lease-level cash flows, robust market comparable and rent roll analyses are essential.

Cap rates for institutional-grade multifamily assets have remained compressed in high-growth urban and Sun Belt markets due to strong demographic fundamentals and investor appetite for income durability. Recent valuation adjustments have accounted for rising interest rates, rent growth deceleration, and increased operational costs (e.g., insurance, labor, and maintenance). Class B and value-added properties have seen higher yield expectations due to renovation risk and tenant affordability concerns.

As per the National Association of REALTORS, in early 2025, the multifamily housing sector demonstrated signs of stabilization, bolstered by robust rental demand and a notable 46% increase in net absorption, amounting to nearly 551,000 units. Despite ongoing challenges of new supply outpacing demand by 18%, the disparity narrowed, thereby sustaining stable vacancy rates at 8%. Rent escalation remained conservative at 1.1%, indicative of market equilibrium.

Construction activity decelerated significantly, with units under development declining by 33% compared to the previous year. High-demand metropolitan areas such as Dallas-Fort Worth, New York, and Atlanta each absorbed upwards of 20,000 units. Conversely, rental rates experienced declines in oversaturated Sun Belt cities like Austin and Denver, while registering substantial growth in markets like Providence and Rochester.

Office Properties

Office valuations are underpinned by projected NOI stability and re-leasing risk. Increasingly, investors are relying on DCF models with greater granularity around lease rollover schedules, tenant creditworthiness, and downtime/re-tenanting assumptions. Valuers are also incorporating workplace utilization trends and tenant incentives into cash flow modeling.

Office assets have experienced pronounced bifurcation. Trophy and Class A buildings in prime locations with strong ESG credentials and modern amenities are still achieving relatively strong valuations, albeit with cautious underwriting. Conversely, valuations for legacy B/C assets have deteriorated due to structurally lower occupancy, rising vacancy rates, and a persistent shift toward hybrid work models. Capital expenditure requirements for repositioning or adaptive reuse are also becoming central to valuation analyses.

As of early 2025, the U.S. office sector continued to experience negative net absorption; however, overall market dynamics exhibited marked improvement year-over-year. Total office move-outs contracted substantially declining to -20.5 million square feet representing a threefold reduction as a growing number of firms implemented more definitive return-to-office strategies. Despite ongoing negative absorption, the addition of 24.5 million square feet in newly delivered inventory contributed to an increase in the national vacancy rate, which rose to 14.1%. Rental rates advanced modestly, with a quarterly gain of 0.2%, resulting in a 1.1% annual increase. All office property classes registered reduced outflows relative to the prior year, signaling broad-based stabilization. Regionally, Boston and Washington, DC experienced the most pronounced contractions, while San Francisco demonstrated a significant moderation in move-outs. In contrast, New York and Sacramento emerged as outperformers, each achieving over 1 million square feet of positive net absorption. Notably, New York reversed a prior-year deficit of 8.4 million square feet to post a robust gain of 3.4 million square feet, underscoring a strong rebound in occupier demand.

Retail Properties

The retail real estate sector continues to experience exceptionally tight availability conditions, with the current share of leasable retail space standing at a historic low of just 4.7%. This constrained supply environment has effectively maintained vacancy rates near 4%, despite a noticeable deceleration in overall demand growth. Over the trailing twelve-month period, retail space absorption reached nearly 41 million square feet, reflecting a reduction compared to the 56 million square feet absorbed in the prior year.

This moderation in demand growth signals a softening momentum, yet the sector remains fundamentally strong due to the persistent scarcity of available spaces. Compounding this dynamic, new construction deliveries have declined further, limiting the expansion of the retail inventory and thereby sustaining a supply-demand imbalance. As a result, the retail market is poised to retain its tight conditions throughout 2024, underpinned by strong underlying demand and a restrained pipeline of new developments, which together support continued rental rate stability and competitive leasing environments.