Is AvalonBay Communities, Inc. overvalued or undervalued?

As of 20 June 2025, AvalonBay Communities, Inc. has moved from an attractive to a fair valuation grade. The company appears to be fairly valued at this time. Key ratios include a P/E ratio of 25, an EV to EBITDA of 16.09, and a PEG ratio of 1.40, which suggest that while the company is not undervalued, it is also not significantly overvalued compared to its peers.
In comparison to its peers, AvalonBay's P/E ratio of 25 is lower than that of American Tower Corp., which stands at 34.12, indicating that AvalonBay is more reasonably priced. However, it is worth noting that Welltower, Inc. has an extremely high P/E ratio of 81.67, which further emphasizes AvalonBay's relative valuation. Despite a recent underperformance against the S&P 500 year-to-date, where AvalonBay has returned -5.59% compared to the S&P 500's 2.44%, the company's valuation metrics suggest it is fairly positioned within the market.