Manhattan Condos Are Barely Yielding More Than Government Treasuries

Newly purchased condos that were listed for lease in the second quarter brought their owners a median return of 2.5 percent, according to an analysis released Monday by property-listings website StreetEasy. It's been stuck at that level since the end of last year, the lowest in data going back to 2010. The median yield on relatively risk-free 10-year Treasury notes was 2.25 percent in the second quarter.

"This is the lowest point we've seen in history," Grant Long, a senior economist at StreetEasy, said in an interview. "It's a steady downward trend."

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The investment thesis had promise in 2011, when rental yields peaked at 3.9 percent in the third quarter. But as developers added ever-pricier units to the skyline and the supply of rentals swelled, income prospects for those who buy and lease out condos have been diminishing fast.

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In 2011, the median purchase price of condo units that became rentals during the third quarter was $899,000, StreetEasy said. In the second quarter of this year, investors who bought condos to lease out paid almost double that amount -- a median of $1.7 million.