How will interest rates affect San Francisco Real Estate?
A reader asks:The Fed keeps raising its interest rates, and this is causing long term and short term interest rates to steadily rise. Should I buy now or wait until interest rates start to come back down?
Our answer:
No one can predict what interest rates will be in the future. The San Francisco Chronicle reported June 29, 2006, that rates have passed the 4 year high, but a day later reported that "Sales of New Homes Increase Unexpectedly". When interest rates are rising it can actually be the best time to buy.
During the period where interest rates were lower there was such a frenzy in our market that buyers were paying 10-40% over the asking price or the last comparable sale in the neighborhood. Even with low interest rates that translates into higher loan amounts. Now that rates are moving higher the market is slowing and buyers are getting the opportunity to negiotiate on the price. In some cases they are buying for less than they might have had to pay a few months ago. Keep track of monthly San Francisco real estate market trends on our website. Keep in mind there is about a 30 day lag in reporting because escrows typically take about a month to close.
There is very little down side to buying now. If interest rates fall you can always refinance to lower your payments.
- Janis Stone, Mick Orton
posted by SFResidence.com @ 9:10 AM
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