How Will the Fed Hike Affect Los Angeles?

Chris Macke is the managing director of research and strategy at American Realty Advisors.

Los Angeles real estate investors need not worry about the Fed’s expected routine rate hikes—at least not more than anyone else. Industry professionals frequently say that gateway cities like Los Angeles are more affected by interest rate hikes than other markets, but Christopher Macke, managing director of research and strategy at American Realty Advisors, says that the significant rental rate increases in Los Angeles will offset the potential rise in interest rates.

“Everyone argues that rate increases are going to hurt the gateway cities more because their cap rates are so low. You have to look at the income and the capital markets effects,” Macke tells GlobeSt.com. “The Southern California market in general will have stronger rent growth and property fundamentals because of supply constraints. As a result, there will be less of an impact because rental rate increases will offset the interest rate increases.”