The Size of U.S. Asset Markets in 2024

The U.S. equity market, with a $64.4 trillion market cap, surged 20.5% in value since Q2 2023—more than twice its average growth rate since 1998.

Like much of the past two years, big tech companies have powered the bull run, bolstered by earnings growth and a resilient U.S. economy. This has pushed the price-to-earnings (P/E) ratio of the S&P 500 higher than the 15.7 median level since 1989, suggesting that companies remain overvalued. As of Q2 2024, the S&P 500 P/E ratio reached 27.9.

When it comes to the residential property market, valuations hover near mid-2000 peaks. While nominal home price growth continues to rise, it is growing at a slower rate than the highs seen in 2022. Overall, the U.S. housing market expanded by 6% year-over-year, falling just under historical averages.

In contrast, the size of the U.S. commercial real estate market declined by 10.8%, pressured by rising office vacancy rates and slow rental growth. Moreover, capitalization rates, a key measure for analyzing the income earned by commercial properties compared to their valuations, stands significantly below historical averages, suggesting deteriorating fundamentals. Source