Linneman Letter – January 2026

The following is an excerpt from the Winter 2025-26 edition of The Linneman Letter:

Counter-Narrative: The Key Driver of Cap Rates Another counter to the prevailing narrative is our research finding that real estate cap rates are driven primarily by the flow of funds. We have noted that the flow of funds is below normal based on the Linneman Real Estate index, depressed transaction volumes, and substantial private equity dry powder. This is in part due to the abnormally high short-term, low-risk real rate of return created by the Fed’s too high interest rates. Some have countered that money flows in the economy must be loose today because stock market valuations are at record highs and this could only occur in a loose money regime.

Read the entire article – LL_Winter_2025-2026_NAI_Realvest