Rob Eyler has a PhD in economics from UC Davis and has been a professor at Sonoma State since 1995. In 2005 he started legal consulting on the economic impact in labor markets and providing analysis for cities and counties as well as private companies. His expertise in academia is macroeconomics, focused mainly on monetary and economic policy.
Q: "How do you see the Fed's current monetary policy affecting economic growth and inflation through 2025?"
"I see a damper on growth as rates fall as a slower pace compared to the last 8 months. Consequently, this will result in different decisions for hiring and growth. Large durable purchases, such as cars and appliances, will slow down. There are rumblings that the fed dropping rates will provide marginal relief. If it continues to drop rates, then there will be a small 2-2.5% growth. We are in a pre-pandemic growth pattern like 2017-18 with no recession forecasted. If policies are uncertain and unpredictable would that create stasis, yes if generalized not zaniness for 24 hours. Politically, the rationale is to solve problems through that mechanism.
Q: "What sectors do you see driving California's economic growth in the next decade, and how might this shift from historical patterns?"
"Hard to know if California will carve out a niche that we don’t already know. AI frontier technology is the core, not the data center and “worker bee” aspect. Climate change tech still holds: battery and wind power design. Agricultural technology may evolve. “CA jobs first” is what the government declared where we need to go. Burgeoning verticals are business services and healthcare. Building might slow down due to costs. California’s ability to attract people is still below pre pandemic levels."
Q: "How is the shift toward remote work continuing to affect commercial real estate values and office occupancy in the Bay Area?"
"Corporate America frontier tech brings workers back to the office. Only 70% of commercial pre-pandemic utilization. Nationally, cities like Austin, Nashville, and Raleigh are having tertiary businesses affected, and will need to offset with price increases."
Q: "How might recent housing legislation and construction trends affect housing inventory levels across the Bay Area in 2025?"
"The cost for new units will make it move slower. 750,000 units were predicted for 2030 and now it will be more like 600,000 units.
Existing unit sales will also be very slow. Mortgage rates at 6.5% versus 3% for existing home owners will keep them put unless forced to sell and cash out. There is no economic incentive for 75% more interest. As unemployment increase, some will be able to live off equity gains. It would take a national recession to push units up. 2011 and 2019 are example of what happens in the recession market."
Investment Perspective
Q: "What advice would you give to real estate investors in the Bay Area in 2025 for the residential market? Which opportunities and risks should they be watching?"
"It is somewhat risky as the population is not coming back in earnest, creating slow moving demand. There will be demand but it will move at a slow pace. The big “go back to office” mandate may be a net positive for demand. Risk is more medium term than short. The equity market can make a huge difference–even slow and steady, which would mitigate the risk."
Affordability
Q: "How do you see housing affordability evolving in 2025, especially given the interplay between interest rates, tech wages, and home prices?"
"It’s going to get worse, and rents are not going down. Insurance costs affect PITI (principal, interest, taxes, insurance) going up, and that has a direct effect on affordability. Will they see that and walk away? More generally, there will be mounted headwinds, and then tailwinds. The lack of existing units will still bring multiple offers to desirable areas and housing stock. "
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