What Is Yield Compression?
Yield compression is a fall in cap rates (or yields) across a market, typically driven by increased investor demand or competition for a limited supply of assets — pushing prices up for properties with the same income.
Why it matters
Yield compression is a market-wide price movement, distinct from an individual property's own appreciation — it means buyers are simply willing to accept a lower return for the same income stream.
Related Terms
More Commercial & Appraisal Terms
This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
Understand a property's costs and risks before you make an offer
Use the free calculator for your own numbers, or analyze a specific home before you commit.
Or analyze a specific property: Essential Property Analysis, $19 · Property Decision Analysis, $49 · Professional Property Analysis, $99. You choose the depth before you pay.