How Will Rising Mortgage Rates Affect San Francisco Real Estate?

San Francisco Real Estate Question

I just got a question from a reader:
Q: I just heard that mortgage rates might be heading upwards.  Do you think prices in San Francisco will keep falling?
Well – first thing to note, is that prices have actually stabilized and in some neighborhoods, are actually rising, albeit slowly.  So the term “keep falling” may not apply to SF at all.
Some say that the low interest rates that we see now will be a thing of the past in just a few more months.  The Fed is keeping short-term rates low, but rumor has it, will be buying fewer mortgage-backed securities, which would cause rates to rise.
This would definitely decrease the purchasing power of home-buyers and may have an impact on prices, but with San Francisco, it’s hard to tell since we have consistently bucked the trends that the rest of the country seems to experience. 
In fact, right now, multiple offers over the asking price are fairly common in SF. 
So, unfortunately, there’s no crystal ball in real estate, especially in San Francisco real estate.  Since we’re not even sure that rates will increase soon, we have too many unknown variables to even make an educated guess at to what 2010 will bring.
Readers, do you have any thoughts?  If so, email me, or drop a note in the comments.

Luba

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