But, today, as an illustration, low interest rates drove down cap rates to about 5%.
The question will be how much compression buyers will accept before they require higher cap rates.
Starry-eyed buyers think nothing these days of settling for 4% yields, or cap rates.
Hence cap rates on homes tend to be on the low side, ( see map).
When cap rates are low, income property rises in value and visa versa.
ObamaCare makes federal and state efforts to cap rates even more complicated because the law mandates all sorts of costly benefits.
In markets where house prices didn't spike as they did in LA, cap rates tend to be a bit more generous.
As the interest rates are held down by Central Bankers, then cap rates in real estate investments are also artificially low.
Since the start of the modern REIT era, implied cap rates have averaged 8 percent and dividend yields have averaged 6 percent.
Historically, residential cap rates have been between 5% and 10% .
It wants Congress to impose a national interest rate cap of 10% on credit cards and other types of consumer loans and to cap rates at 6% for veterans.
But that changed with the Acadia-Storage Post deal and a few other transactions, where the cap rates were similar to those on trophy office skyscrapers and upscale apartment buildings.
Nationally, Bank Leumi USA says, developers of luxury apartment buildings are selling them to commercial buyers for cap rates of 6% to 7%--one to two percentage points over ten-year Treasury yields.
But we can say that you've got better odds for appreciation if you buy where cap rates are high and better odds for a price decline if you buy where cap rates are low.
Just 10 months ago, cap rates on storage space were near 7% and were as high as 9% during the commercial real-estate downturn in 2009 and were generally several percentage points higher than cap rates on most other types of commercial real estate, according to data from Green Street Advisors.
Although we know the 10 year treasury yield is artificially low right now, we still feel like REITs are not overvalued given the higher quality of REIT portfolios today (which would warrant lower relative cap rates), and given the lower dividend payout ratios (currently 74 percent of AFFO versus historical average of 82 percent).
The House measure would cap interest rates at 8.5% for student loans while the Obama proposal would contain no such cap but would include a program to limit a former student's annual expenditures on the loan to no more than 10% of discretionary income.
You would need to cap interest rates - either explicitly or by market manipulation.
So do cap gains rates have some form of inverse impact on market direction?
Administrative rules likely will cap interest rates at 20%, down from the current 29%.
That's because for 2003 there are seven different long-term cap gains rates, up from five in 2002.
His biggest claim to fame was the so-called Ryan Budget, which sought to slash the government budget by trillions of dollars and cap tax rates.
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So the bulk of the issue is likely sunsetting of current income and cap gains tax rates.
In addition, a cap on interest rates offered by banks--less than 10%--virtually eliminates the risk premium associated with energy efficiency investments.
And many consumer organisations resist a legal cap on interest rates too.
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Earlier this year, Senator Richard Durbin, a Democrat of Illinois, introduced a bill that would cap national interest rates on most consumer loans at 36 percent.
The old model reflects a portfolio that may have been justified decades ago, when U.S. stocks made up over 70% of world market cap and Treasury rates actually outpaced the rate of inflation.
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Mr Hoban noted that a wider government review of the consumer credit industry was already being carried out, and said that a cap on interest rates would be considered "properly and carefully" as part of the review.
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