A recent article from GlobeSt.com discussed the continuing rise in interest rates, as well as cap rate compression. Traditionally, there is a direct correlation between interest rates and cap rates. As interest rates rise, so do cap rates. However, we are seeing the opposite effect take place, primarily due to an increase of capital in the market.
The flood of capital in the market is directly related to people being frustrated earning less than 1% in banks and money market accounts. As they try to branch out to earn higher returns they have started to turn to Real Estate. This is not only a problem in the United States, but in the global market as well. Many foreigners are seeing the US as a safe haven for Real Estate investments. Read the full article by clicking here.
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