Treasury Yields Surpass Rental Property Returns, Government Bonds Now Top Choice

The recent surge in US Treasury yields has made government bonds more attractive to investors than rental properties. According to Nick Gerli, CEO of a real estate data firm, buying a 10-year US government bond is now a more profitable option for the average investor than becoming a typical landlord.

The negative housing spreads have reached their highest level since July 2007, with the US 10-year Treasury yield-to-maturity closing at 5.11% on Wednesday and increasing to 5.18% on Thursday. This is higher than the single-family home cap rate of 4.8%, which takes into account expenses.

The current interest rate environment has led to a situation where investors can earn more from US Treasuries than from renting out real estate. The recent rate hike by the Federal Reserve and its projections for further increases this year have contributed to the surge in Treasury yields.