'Too high' is subjective, but we can definitely say prices are rising and returns are compressing. Since ~2012 interest rates have hovered between 3.5-4.5%:
This was extremely low by historical standards:
At the same time, property prices were crushed from the financial crisis. The result was a golden age of opportunity if you had a little capital and decent credit. In the last year, rates have risen at least 1% (I'm now seeing 5-5.5% as the norm for investment properties - June 2018), and they will likely continue that ascent barring some major economic impact. Compounding this, unemployment is the lowest it has been since before the Great Recession, meaning people have money and are bidding up the prices of properties. The result is that we have both rising interest rates and rising home prices, which will ultimately compress returns. I ran some analysis on this, and for a property with a ~10.5% CoC return at 4% interest rates, that will drop to ~8.5% at 5% interest rates:
If you compound that with increasing property prices by say 5%, then the CoC drops to 7% . The relationship is pretty consistent - increase rates by 1%, see a ~2% drop in CoC. Increase prices by ~5%, see a ~1.5% drop in CoC. Both at the same time will drag down CoC by ~3.5%.
So yes, in the last year we've seen rates rise by ~1% across the board, and many markets are seeing home prices that are at least 5% higher than they were a year ago. The result is compressed returns for investors. The question is, what do you do about this? You can slow down or stop investing, which isn't a bad strategy in the short term if you don't see deals that make sense for you. You can search for new markets - which many people are doing. I believe this is why a lot of the secondary / tertiary markets are now picking up more. Or you can look for alternative ways to invest your money... unfortunately, the stock market isn't offering any bargains right now either. So the right choice is probably some version of move forward, but with caution. Hold to your standards and don't reach for returns by going outside your circle of competence. It's widely noted that we'll be in for a bumpy ride going into 2019/2020 as the Fed dials up interest rates, at the same time that the tax stimulus subsides. Only then will we find out who was swimming without any trunks on.
Good luck!