According to a First American Financial Corporation analysis, cap rates might finally start to recover some of their value. 

The firm's potential capitalization rate (PCR) model for the first quarter of 2022 "estimates capitalization rates based on the historical relationship between interest rates, rental income, prevailing occupancy rates, the amount of commercial mortgage debt in the economy, and recent property price trends."

As the company noted, inflation has stubbornly hung in, rather than being the "transient" phenomenon the Federal Reserve predicted it would be because of pandemic-induced supply chain issues. Eventually the Fed started tightening monetary policy, most recently raising its benchmark interest rates by 75 points, the largest single jump since 1994.

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