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Real Estate

U.S. Real Estate: A Modest Start to the Recovery

November 2024 – 9 min read

The first major real estate downturn since the GFC is almost over. Demand is rebounding modestly across most of the U.S. real estate market while supply continues to pull back. This backdrop is presenting select opportunities in the asset class—but near-term risks remain.

Economy
  • With a soft-landing materializing, a 50 bps rate cut in September signaled an end to an aggressive Fed hiking campaign.
  • Despite tighter financial conditions, the demand backdrop remains supportive, although pockets of weakness are percolating.
  • Near-term risks are front and center of investor minds—from political uncertainty to inflationary pressures and implications for the rate outlook.
Property Markets
  • Transaction activity and valuation trends are bottoming as investors price in elevated base rates and risk premiums for the long-term relative to the pre-2022 era of unsustainably loose monetary policy.
  • Demand is rebounding modestly across most of the major property types while supply activity continues to pull back, resulting in stabilizing vacancy rates.
  • Financing is more available, but leverage is still not wildly accretive.

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Dags Chen, CFA

Head of U.S. Real Estate Research & Strategy

Lincoln Janes, CFA

Director, Real Estate Research & Strategy

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