Real Estate Investment Return History Reference
Direct answer: U.S. REITs (FTSE NAREIT All REITs Index) returned about 9.1% annually from 1972 to 2024, slightly below the S&P 500's 10.5% but with higher dividend income. Direct commercial real estate has returned 7-9% annually through the NCREIF Property Index. Residential real estate returned about 4-5% annually in price appreciation.
Real Estate Returns by Type (Long-Term Averages)
| Asset Type | Ann. Total Return | Price Appreciation | Income Yield | Correlation to Stocks | Liquidity |
|---|---|---|---|---|---|
| U.S. REITs (FTSE NAREIT) | 9.1% (1972-2024) | ~4.5% | ~4.6% | 0.55-0.70 | High (public) |
| Equity REITs | 10.2% | ~5.0% | ~5.2% | 0.58-0.72 | High |
| Mortgage REITs | 7.8% | ~1.5% | ~10-12% | 0.30-0.45 | High |
| NCREIF (direct commercial) | 8.0% (1978-2024) | ~3.5% | ~5.5% | 0.15-0.30 | Very low |
| Residential (Case-Shiller) | ~4.5% price (1987-2024) | ~4.5% | ~3-4% rental | 0.10-0.25 | Low |
| Real Estate Crowdfunding | ~8-12%* | Varies | Varies | 0.20-0.40 | Low |
| Non-traded REITs | ~6-9%* | Varies | ~5-6% | 0.20-0.40 | Very low |
Source: FTSE NAREIT, NCREIF, S&P CoreLogic Case-Shiller. *Estimates. Last verified: September 2026.
Frequently Asked Questions
Are REITs a good inflation hedge?
REITs provide partial inflation protection because property rents and values tend to rise with inflation over long periods. However, rising interest rates (common during inflationary periods) reduce REIT valuations by increasing capitalization rates and borrowing costs. REITs struggled significantly in 2022 (-26%) during the Fed's rate hike cycle despite high inflation.
What is the NCREIF Property Index?
The NCREIF (National Council of Real Estate Investment Fiduciaries) Property Index tracks returns on institutional-quality commercial real estate held by pension funds and endowments. It includes apartments, industrial, office, and retail properties. Returns are appraised quarterly, which smooths volatility relative to public REITs tracking the same underlying assets.
How do REITs compare to direct real estate investment?
REITs offer liquidity, diversification, and no property management, but with higher stock-market correlation and no leverage control. Direct real estate offers tax advantages (depreciation, 1031 exchanges), leverage, and lower short-term volatility (due to infrequent appraisals), but requires significant capital, management effort, and is highly illiquid. Returns over long periods are broadly similar.