Any second level thinking in regard to how multi family properties will trade coming out of record low interest rates? With all these institutions acquiring properties at sub 3.5 caps, if we see slight significant increase in rates, what would happen to the market? Typically pricing follows interest rates and if cap rates are now at 5%, what would be your firms strategy that acquired a stabilized or core plus deal at a 3.2% cap rate? Do you see rates for rents also increasing since a mortgage would be more expensive, pricing out homeowners?
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Generally, when interest rates go up, property values go down. Cap rates follow interest rates, pricing does not follow interest rates. Rents follow interest rates.
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