Why do multifamily cap rates continue to compress?
It continues to be difficult to get multifamily deals to pencil in this current environment. What are the biggest drivers of the insanely high price levels multifamily assets are currently trading at?
Demand. Institutions can’t buy office or retail right now so they focus on multi and industrial. Due to high demand, cap rates fall.
Recent interest rate moves (interest rates will always move faster that cap rates), capital inflows that would have previously been allocated to office/retail/hotel, and rising construction costs
There is just so much capital allocated to it right now that pricing doesn’t effect deployment as much as it should.
Shhh just buy 😉
Bubble
interest rates
If a cap rate in an unleveled method to find a property value then from a macro perspective how do interest rates affect cap rates? To note, I agree interest rates and cap rates have a positive correlation but can someone dumb that down for me? Thanks!
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