Ken Rosen: Take Advantage of Low Interest Rates Now!

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.

2 responses to “Ken Rosen: Take Advantage of Low Interest Rates Now!”

  1. Andy says:

    I don’t necessarily disagree, but what did he say about the length of time we can expect rates to stay this low, and what happens when they start to rise. As an economist, he should be pointing out that there is a balance; and that prices will react (decrease) if interest rates are increased. So the question becomes, does the proportionate rise in rate offset the decrease in price. For me, especially in SF, price is a big deal since our tax rates are tied to price and I’d much rather have a low cost basis. Another point to consider is the impact that raising interest rates will inevitably have on the broad basis of home owners with variable rate loans. It’s not a good impact, let’s leave it at that for the sake of this discussion. This fact probably more a signal that rates will remain low since no one but the sadistic want to see more homeowners pushed out and more bank foreclosures. The real estate market is very fragile right now. Several external forces are controling “prices” unlike the heyday when real estate itself was rising tremendously. For me, I’d encourage potential buyers and sellers that it looks like the worst is behind us and very few are predicting anything remotely close to catastrophic in residential real estate — so it may make sense to consider a transaction if you think you’ve found a good home.

    Also, you have to remember the audience this guy is speaking to directly. Hard to believe he wouldn’t have a pro-buynow sentiment. Again, I don’t disagree entirely, but I wouldn’t go so far as to preach this as bible. Lastly, who’s calling the ‘bottom’ in the post above, you, or Rosen?

    Thanks for the update and keep up the updates. I’ve been enjoying the site for some time now!

  2. […] on December 3, 2009 Just wanted to pass along some insightful reader comments in response to Ken Rosen’s theories on where interest rates are […]

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