The low interest rates we’re currently enjoying will be higher by the middle of 2010, according to economist Ken Rosen. I attended yesterday’s First Republic holiday luncheon in San Francisco, where Rosen presented his thoughts on the state of the current residential real estate market.

Realtors love to tout low interest rates as a way of encouraging buyers to get off the fence. So coming from a Realtor, this sentiment is looked upon by consumers with a grain of salt. But when it’s coming from a well-known economist, the news should make consumers take notice.

In other parts of the economy, we have a long road to recovery. On the positive side, Rosen pointed out capital markets improvements and the stimulus package. But the “foreclosure tsunami,” continued credit losses, employment weaknesses and high oil prices are still dragging everything down.

There have been small housing price increases of late in San Francisco, but those have taken place in the entry-level part of the market, according to Rosen. In the last three months, averages in this market segment have gone up 2-3%. He expects the tax credits and low interest rates to spur purchasing activity in the new year, and the jumbo loan market to pick up again in—when else?—mid 2010.

So buyers, get busy while you still have the advantage. Rosen’s belief is that the best loan to get is the one given at the bottom of the market. That, apparently, means now.