Multifamily Cap Rates vs. the 10-Year Treasury
Multifamily cap rates are compared with the 10-year Treasury yield because both are yields on long-lived assets, and the gap between them, the spread, is roughly the extra return buyers demand for owning an apartment building instead of a government bond. When Treasury yields rise and the spread does not shrink to absorb it, cap rates rise and building values fall. The 10-year yield was 5.05% on October 28, 2026, according to FRED, compared with an average of 0.89% in 2020; the spread is a useful check on a deal, but it is not a forecast of where cap rates go next.
This guide explains the comparison, gives the 10-year yield's history from the Federal Reserve Bank of St. Louis, shows in dollars how a rate move changes a building's value and its equity, and covers the limits of the spread.
Why compare cap rates with the 10-year Treasury?
A cap rate is a building's net operating income divided by its price, the unlevered yield a buyer gets on day one. See what is a good cap rate for how to judge one against sales and debt costs.
A 10-year Treasury note pays a yield set by the bond market, with very little credit risk. An apartment building has much more risk: rents can fall, expenses can rise, the roof can fail and it cannot be sold in a day. Buyers expect to be paid for that, so in most markets the cap rate sits above the Treasury yield. The difference, measured in percentage points or basis points (100 basis points = 1 point), is the spread.
Two other links tie them together:
- Loan pricing. Fixed-rate apartment loans are priced as a Treasury yield plus a lender spread. Freddie Mac's small-loan term sheet, for example, describes the Treasury index as "the most volatile part of the coupon" (Freddie Mac). When the Treasury rises, so does the loan rate, and the buyer can pay less for the same income.
- Competition for capital. When a safe bond pays 5%, a building priced at a 5% cap rate offers little extra for its risk, so buyers push prices down or walk away.
What has the 10-year Treasury yield done?
FRED, the Federal Reserve Bank of St. Louis data service, publishes the daily 10-year yield as series DGS10 (FRED). Annual and monthly averages from that series:
| Period | 10-year Treasury yield (average) |
|---|---|
| 2000 | 6.03% |
| 2007 | 4.63% |
| 2009 | 3.26% |
| 2012 | 1.80% |
| 2019 | 2.14% |
| 2020 | 0.89% |
| July 2020 (monthly low in this period) | 0.62% |
| 2022 | 2.95% |
| October 2023 | 4.80% |
| 2024 | 4.21% |
| 2025 | 4.29% |
| October 2026 (month to date) | 5.15% |
| October 28, 2026 (daily) | 5.05% |
The yield fell for most of two decades, bottomed in 2020, and by 2023 its annual average was more than four times the 2020 level. Loans made when yields were low now refinance at much higher rates, a risk Freddie Mac flagged in its January 2024 paper on multifamily maturities; see our multifamily outlook for 2026.
What are multifamily cap rates right now?
We only quote cap rates from a published survey we can load and check, and the major surveys put their figures in gated downloads. CBRE's H1 2026 U.S. Cap Rate Survey, published August 12, 2026, says on its public page that "Infill multifamily is overall the most bearish subtype" in respondents' expectations, but its cap rate tables are in the full report (CBRE). So instead of a national average, here is the method for your own market:
- Find recent sales of similar buildings nearby and their NOI at sale, from a broker or the offering memorandum, and compute NOI / price yourself.
- Check the NOI used. Trailing 12 months, in-place, or a pro forma? A "cap rate" on projected NOI is not comparable to one on actual NOI.
- Subtract today's 10-year yield (from FRED) to get the spread.
- Compare the spread with the loan rate. If the cap rate is below the loan rate, leverage reduces the cash yield in year 1 (negative leverage).
How does a rate move change a building's value?
Here is the math, using a building with $600,000 of NOI bought at a 5.75% cap rate with a loan of 65% of the price. All numbers are hypothetical, for illustration only. Assume the 10-year yield is 5.05%, so the spread at purchase is 5.75% - 5.05% = 0.70 points.
| Cap rate | Value (NOI / cap rate) | Change in value | Equity after the $6,783,000 loan | Change in equity |
|---|---|---|---|---|
| 5.25% (cap rates fall 0.50) | $11,428,571 | +9.5% | $4,645,571 | +27.2% |
| 5.75% (at purchase) | $10,434,783 | none | $3,651,783 | none |
| 6.25% (cap rates rise 0.50) | $9,600,000 | -8.0% | $2,817,000 | -22.9% |
| 6.75% (cap rates rise 1.00) | $8,888,889 | -14.8% | $2,105,889 | -42.3% |
How it works: $600,000 / 0.0575 = $10,434,783; 65% of that is a $6,783,000 loan (rounded); $600,000 / 0.0625 = $9,600,000, and $9,600,000 - $6,783,000 = $2,817,000, which is 22.9% less than $3,651,783. Income did not change at all; only the cap rate did. Leverage turns an 8% fall in value into a 23% fall in equity.
Now connect it to Treasuries. If the 10-year yield rose 0.50 point and the spread stayed at 0.70, the cap rate would go from 5.75% to 6.25%, the third row. If instead the spread narrowed to 0.20 point, the cap rate would stay at 5.75%. That is the whole debate in one line: whether a rate rise lands on value or is absorbed by a thinner spread. See exit cap rate assumptions for how to set the cap rate at sale.
Why isn't the spread a forecast?
- The relationship is loose. Cap rates tend to move with borrowing costs, but not one for one and not at the same time. Transactions take months, and sellers hold out for old prices.
- NOI growth matters too. Buyers accept a thin spread if they expect rents to grow, and demand a wide one if they expect them to fall.
- The measures differ. A cap rate is a current income yield on a property; the Treasury is a fixed yield on a bond held to maturity. They respond to different risks.
- "Normal" changes. A spread that held for a decade can shift for another decade. Avoid anyone who says cap rates "must" revert to a past spread.
What the spread does tell you is how much cushion a deal has. A purchase at a cap rate below the 10-year yield, or below the loan rate, relies on income growth or falling rates to work. Ask the sponsor which one, and what happens if neither comes.
What should an investor ask?
- What cap rate did you buy at, and on which NOI?
- What is the loan rate, and is it fixed or floating? If floating, is there a rate cap? See interest rate caps.
- What exit cap rate does the model assume, and how does it compare with the purchase cap rate?
- What is the return if the exit cap rate is 0.50 or 1.00 point higher?
- Does the business plan need rates to fall?
How DoorRaise fits in
DoorRaise does not value buildings or predict rates. Sponsors use it to raise equity for apartment buildings with 5 or more units from their friends and followers, with verified accredited investors, and to give those investors one deal page with the purchase price, loan terms and the sponsor's assumptions. DoorRaise forms the LLC, prepares the offering documents, files Form D and verifies accreditation for 506(c) deals. Investors fund by wire into escrow at Enterprise Bank & Trust, an FDIC-insured bank, and distributions are quarterly by default. Fees are $1,500 to set up (non-refundable), $5,000 at closing (only if the deal closes) and $3,500 a year.
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FAQ
Why are multifamily cap rates compared with the 10-year Treasury?
Because the Treasury is a lower-risk benchmark yield, and apartment loans are priced off it. The spread between the cap rate and the Treasury yield is roughly the extra return buyers require for the risk of owning a building.
What are multifamily cap rates right now?
They depend on the market, the building and the NOI used. National surveys publish averages in their full reports; for a specific deal, compute NOI / price on recent nearby sales and compare with today's 10-year yield from FRED.
How have multifamily cap rates changed over time?
They tend to move with interest rates and investor expectations, though not one for one. The 10-year yield, the usual benchmark, went from a 0.89% average in 2020 to 5.05% on October 28, 2026, which has pushed borrowing costs up across the market.
What is a normal spread between cap rates and Treasuries?
There is no fixed normal. Spreads change with rate expectations, rent growth expectations and risk appetite. Treat any "normal" spread as a historical observation, not a rule.
What happens to apartment values when interest rates rise?
If cap rates rise with rates, values fall even when income holds. In our example, a 0.50 point higher cap rate cut value by 8% and equity by about 23%.
Sources
- Federal Reserve Bank of St. Louis (FRED), Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (DGS10), accessed October 30, 2026
- Freddie Mac Multifamily, Optigo Conventional Small term sheet (4/26)
- CBRE, U.S. Cap Rate Survey H1 2026 (August 12, 2026)
This article is general information, not legal, tax or investment advice, and not a forecast. Every investment can lose money. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.