Investor Exodus from Residential Real Estate: Math, Not Conspiracy, Drives Shift

Investors are pulling back from the single-family rental market due to narrowing profit margins, driven by rising interest rates and modest rent growth. The 10-year Treasury yield, currently at 4.0%, is outcompeting typical 4.9% cap rates on rental properties. Experts anticipate a return of investors only when Treasury yields fall below 3.0% or cap rates climb above 6.0%, requiring significant price drops. Southeast markets, particularly in Alabama, Georgia, and South Carolina, offer more attractive unlevered returns of 7-8% due to lower insurance and property tax rates.

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