That is a related observation.The fact that the same thing is happening across multiple markets just confirms nationwide low inventory.When you add that to overpriced listings and cap rate compression in the face of record low interest rates,that has to have you worried.If you've invested across at least 2-3 RE cycles,you can't help but recognize the feeling of deja vu.

All of that said, yes, competition compresses the margins on EVERYTHING. 

Today it still throws off decent yield but cap rates are somewhat compressed.

@Mark DouglasI'm in Nashville too and I'm seeing aggressive cap rate compression here.

As the area gets better the 12 cap exit could compress to 11.5 or 11 etc. thereby with increased rents giving you more forced appreciation.I am not saying these investments can't work.

It simply is the result of compressing all the costs of acquisition and of disposition into a short time frame, which takes all the steam out of your IRR.

Cap rates are compressed in Greater Phoenix area, but there is some good buys in the fringe areas, or if you go smaller into residential (i.e.

People will pay higher for more stable assets, thus compressing cap rates, but the yield goes down.Cs cash flow more but appreciate less than Bs or As (unless forced appreciation)Hope that helpsGino

Oh, and they are being repackaged into securities.I am sure you would agree the macro environment has a lot to do with how people feel and therefore how well the economy does generally.I have come to think that the debt load will be a hindrance on growth, and 10 years of low rates has baked in some risks, we otherwise would not have, in place.I am absolutely investing in real estate, especially since the last similar instances of this situation have sent the stock market sideways for a decade, and imo will put a lot of pressure on multi family or any cash generating asset.That certainly could compress cap rates even more, but will vacancies increase at the same time?

Somehow, they think that cap rates have compressed in more dynamic cities but have remained static in Rust Belt cities.