Drop in 10-year Treasury Gives Real Estate Pricing a Lift

August 24, 2016



Drop in 10-year Treasury Gives Real Estate Pricing a Lift

Aug 24, 2016 | | National Real Estate Investor

Industry experts who have been sounding the death knell for cap rate compression received a temporary reprieve thanks to a further drop in the 10-year Treasury.

For the past year, signs having been pointing towards decelerating price appreciation. The Moody’s/RCA CPPI was relatively flat between August 2015 and April 2016, rising just 1.0 percent over that eight-month period. That halt in upward trajectory was not entirely unexpected given that the composite index had been enjoying robust growth of more than 1.0 percent per month for the prior three years.

“To us, the price run-up seemed a little bit overheated, and the pause was an opportunity to let prices catch up with fundamentals and with inflation,” says Tad Philipp, director of commercial real estate research at ratings firm Moody’s.

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