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April 18, 2016

It’s Up From Here for Interest Rates

San Francisco real estate buyers can expect gradually increasing loan interest rates over the next few years, says Bank of the West’s Chief Economist, Scott Anderson.

I was invited to hear Anderson present his Bay Area forecast at Bank of the West’s downtown San Francisco offices last week. He believes the Fed is at a point where it wants to raise rates, but it will be at a “slow slog” pace. Anderson’s prediction? There will be two rate hikes this year—one in June, and another after the election—followed by four in 2017 and another four in 2018.

The takeway? We probably aren’t going to see lower interest rates in the future.

San Francisco is faring well economically, according to Anderson. We continue to have very low unemployment rates, and new construction is up 600% from the bottom of them market. He also says we aren’t overdoing it on new construction, considering the increase in population in The Bay Area over the last few years.

Anderson also doesn’t predict a decline in home prices. He believes that the high incomes and job growth in San Francisco will continue to support real estate values.

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