Low interest rates prompted real estate in the United States to rise significantly with corresponding ETF shares following. Americans were borrowing cheap money to buy houses and this boosted real estate prices across the country. The real estate bubble, together with rising borrowing costs, undermined the demand for houses. So, VNQ shares lost 30% in 2022.

The valuation of the market’s health could be estimated in different ways, including the share of house prices within the Consumer Price index (CPI), which is now at record 1.1, far above the average of 0.6-0.8, and even above 2008 levels of 0.91. Another indicator is the comparison of house prices to median household incomes that is above 7.6 now vs 4.7 in 2008. Whatever means one may use to estimate it, real estate in the U.S. is overpriced now, so any investments in it would be unjustified at the moment.