Watch a video of the panel discussion. In a first of its kind real estate event, Arixa Capital Advisors and UCLA Anderson School's Ziman Center for Real Estate co-hosted Single Family Take Center Stage on July 10, bringing together over 150 industry professionals for networking and a lively panel discussion on the residential real estate market. Click here to see photos from the event.
Panelists included residential real estate experts Mauricio Umansky from The Agency, Gregory Heber of Community Rebuild Partners, Ramin Kolahi of Lighthouse Investments, Gabe Weinert of Johnson Capital, Kristoffer Winters from the Kristoffer Winters Company, and Jan Brzeski from Arixa Capital Advisors. The program was moderated by Billy Rose from The Agency.
The panel discussion explored economic trends in single family housing with a particular focus on the California residential market, and gave practical advice on investing in single family homes. The panelists disagreed slightly about the strength of future growth in housing, but they were unanimous in their bullish outlook for the market overall.
Fueled by household formation, low interest rates, and limited inventory, Greg Hebner felt that the recovery was on solid ground. He said that home affordability was high relative to rents and that many qualified buyers who had been sitting on the sidelines were finally reentering the market.
Ramin Kolahi dubbed himself a "cynical bull" on the housing market, defined as a bull who is keenly aware of risk factors. Ramin felt that economic growth of 2-2.5%, while not strong for a recovery by historical standards, was indicative of an economy that had found its footing.¬† He cautioned however that low interest rate environments have a tendency to artificially inflate asset values, and that investors should keep an eye on fundamental economic indicators such as wage growth.
Ramin also commented that real estate performance is very localized. He said that while there are areas of the country that are in the midst of a strong recovery, there are other areas that are still far off their peak values.
Mauricio Umansky contributed a counterintuitive observation identifying a rising mortgage rate environment as a catalyst for growth in real estate values. Mauricio said that there is a great deal of money on the sidelines and that now, as interest rates are rising, these idle consumers are encouraged to purchase homes fearing that rates will only continue to rise into the future.
When asked how demand from institutional investors, who are currently buying thousands of distressed single family homes and converting them to rentals, was impacting home prices, Gabe Weinert said that it was having little impact. His argument was that despite the large number of homes these funds are buying, they still only represent a fraction of the housing stock.
The panel also offered practical advice for people interested in investing in single family homes. Kristoffer Winters who had previously regaled the audience with tales from his $24 million home renovation project, said that no one should take on a project thinking that it will be a part-time job. Renovating and flipping is time intensive and a seven day a week endeavor.
Greg Hebner concurred saying that if you are going to be an active investor, you need to become intimately familiar with details of the project, and this takes time. Greg also said that if someone wants exposure to the housing market but does not have time, there is always the option of being a passive investor in someone else's project or fund.
Mauricio Umansky as a lay person who has attempted to flip on his own had two pieces of advice.¬† Number one is to become extremely educated about your local market. And secondly, he said to know the limits of your knowledge and work with professional contractors. Ramin Kolahi's advice was to do what you know. He said to trust your instinct and local knowledge and apply it to a neighborhood you know well. Jan Brzeski advised to learn the business by working with, or shadowing an expert who has been successful at renovating and reselling.