Does anybody remember what cap rates were in 07?

4 Replies

hi pocketeers,

I could not find historical data on cap rates for multifamily, so do you recall what rates were like 10 years ago?

I do remember getting 5% on savings in the bank back then, but what would you expect (cap rate wise) out of a multifamily investement? Generally speaking or us average, i know every market is different.

Check out Marcus and Millichaps 2017 multifamily forecast if you have not already. On page 10 they have a graph of "Apartment Cap Rate Trends" compared to the 10 yr treasury from 1990-2016. This is a national average of sales above $1m but the trend is the trend.

You'll see a sharp dip in 2007 into early 2008 before reverting back up to the mean. However the trend was of compression and it is still occurring due to limited supply and the strong demographic fundamentals in many parts of the US.

Spencer, thank you for the guidance.

Ultimately trying to understand what to expect of cap rates as interest rates rise

As yields on safe "savings account" type investments rise, it seems that expected yields on higher risk investments would rise, given that the acceptable spread an investor would expect, remains constant.

@Rick S.   I think the difference is the savings account does not appreciate with market conditions and or can't raise rent or income.. nor does it have tax advantages. .you have to factor those in as well when you compare the two // and risk adjust

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