“The Old Paradigm Of Low Interest Rates … Is Not Going To Return”

The chairman of the Fisher Center for Real Estate and Urban Economics at the University of California Berkeley’s Hass School of Business, Ken Rosen, believes interest rate increases are about done (Oct 17, 2023), but the current high interest rates are the new normal for the foreseeable future. Dr. Rosen received his Ph.D. in Economics from the Massachusetts Institute of Technology and was a Professor of Economics at Princeton University.

Dr. Rosen points out that the higher interest rates have doubled the debt service and cap rates of commercial real estate. He says, “we’re in the second inning of the delinquency foreclosure process.” He continues that “it is going to take 3-4 years to fully ride out the office sector.” He continues, “Other real estate sectors are doing pretty well, but they are also experiencing increased debt service and decrease in values. So this may be the best opportunity to buy real estate below replacement costs we’ve had since the early 1990’s … and probably below ultimate long-term value.”

Scroll to Top