The cap rate tends to get compressed towards the end of the housing cycle.  

So if that is what is compressing the 10yr yield, and the yield spread, doesn't that also impact the US economy (exogenous shocks?)

At the very bottom assets tread water so you do not have much cash flow but as they recover the asset fills  up and you get cap rate compression and the market cycles down to cap rate peaks for that asset class.You can still get cap rate value by value add deals for lease up, leases coming due on national tenants in a few years where you take a chance on the option renewal, or building new from the ground up so you own a 9 cap you can sell for a 6 instead of buying a 6 going in.   

Recently I have started to warm up to the idea of single family, but much work to be done on whether the numbers work.My uncle actually lives in South Florida (Palm Beach County and Broward) and alot of what I have been reading is that the rental market there is hot, due to compression from Miami as people are being priced out, increasing number of retirees relocating, and less buying amongst younger people due to student loans and a less than ideal job market making it difficult for them to save money for a down payment etc.

Over here on Vancouver Island we still have a positive cap rate but it seems the Vancouver bug is spreading and we are seeing them get compressed. 

. : )  ) and you have about 600k - 160,000 = 440,000 equity gain through cap rate compression.

Waiting on the sidelines because  of cap rate compression IMO is very shortsighted.  

Wells the problem is if you are talking about single tenant net lease that market is cap rate compressed.

With note investing basically a business-to-business transaction, the time frame is greatly compressed for acquisition, and by buying right, there is room in the transaction to have others do the ground work for you.

There is alot of institutional money investing in multi-family which is compressing the cap rates and making it hard to find good deals.