10-year US Treasury yields top typical rental property returns, analysis says
Treasury yields pull ahead of typical rental returns
Buying a 10-year US government bond has become more profitable than being a typical landlord, according to an analysis published by Protos. The article says this advantage for Treasuries is at its highest level since July 2007.
The 10-year Treasury yield-to-maturity — the return an investor gets by holding the bond until it is repaid — closed at 5.11% on Wednesday and rose to 5.18% on Thursday, based on Treasury data cited in the article.
Key numbers behind the comparison
- 10-year Treasury yield-to-maturity: 5.11% on Wednesday and 5.18% on Thursday.
- Benchmark single family home rental cap rate: 4.8%, described by Protos as one of many benchmarks for after-cost returns on rental properties.
- The chart published with the article compares the single family home cap rate at a 45% expense load with the 10-year Treasury yield-to-maturity.
- Nick Gerli, CEO of a real estate data firm, said in a post viewed more than 250,000 times that buying property for cash flow now has a negative opportunity cost compared with government bonds. In his calculation, 10-year Treasuries above 5.1% beat the 4.8% rental cap rate.
Fed rate hike and war-era borrowing push yields up
Protos reported that an oil shock and a borrowing spree during the US war with Iran helped push Treasury bond yields to unusual heights this year. It said a recent rate increase from the Federal Reserve then pushed yields past the level seen during the 2007 housing bubble.
Last week, Fed Chairman Kevin Warsh announced the central bank's first rate hike in three years. The committee's own projections point to an additional increase to the Fed Funds Rate this year.
What is confirmed
The yield figures come from Treasury data linked by Protos, and the rate increase and projections come from the Federal Reserve pages the article links to. The 4.8% cap rate and its comparison with Treasury yields come from the analysis and the chart posted by Gerli.
Negative housing spreads, as described by the article, happen when the interest rate spread on low-risk US Treasuries outperforms the risky business of renting out real estate.
Why the rental comparison is not clear-cut
Protos notes that the 4.8% figure is only one of many benchmarks for after-cost returns on rental properties. Individual owners might earn double-digit returns in strong years with few repairs, and then lose money the next year because of unexpected costs or low occupancy. Real estate returns vary drastically, the article says.
Why the comparison matters
For anyone weighing a government bond against buying a property to rent out, the gap offers a simple reference point: a low-risk government bond is paying more than a common estimate of rental returns. Because individual rental results can differ widely, the headline comparison does not describe every landlord's outcome.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.