Enhanced by a job market outperforming expectations, America’s housing industry has posted strong numbers through 2016’s first two quarters. Renowned real estate investor Frederick Wehba predicted this successful start in late 2015, and recently brought to attention several of the current trends influencing real estate today. The multi-billion dollar firm founder discussed driving factors including inventory limitations, low interest rates, and changes in first time homebuyers.
Census results show that over 650,000 single-family homes were constructed last year, the most since 2008, yet demand continues to exceed supply. As a result, home costs continue to rise in most parts of the country, with RealTrac reporting the average earner spending more than 30 percent of their income on mortgage payments, up 4 percent from the year before. While affording a home is becoming more difficult, obtaining a mortgage is not, and guidelines from Fannie Mae and Freddie Mac are finally relaxing. According to the lending industry leader, Ellie Mae, more than three quarters of purchase loan applications in March were approved, an increase from just two thirds in 2015.
After years of hovering below 4 percent, the Federal Reserve seems poised to raise its interest rates. Long feared as the catalyst of a collapse, Frederick Wehba believes that the Fed has allowed ample time for the real estate market to stabilize and to effectively absorb gradual increases, which are expected to be no more than one percent by the end of quarter four. Buyers are not hesitating at the prospect; with a 30-year mortgage currently around 3.6 percent, rates would have to double before the benefits of homeownership are eliminated.
Burdened by student debt and facing stiff competition, first time buyers are shifting tendencies. Millenials are choosing to sacrifice size for location, and opting to rent more often than purchase. Rental properties and townhouses in walkable urban villages are experiencing unprecedented growth, and now comprise 12 percent of all new home construction. With city prices skyrocketing, suburbs are seeing a similar rise to prominence, especially ones with impressive amenities and accessible downtowns. According to Bank of America Homebuyer Insights Report, more than half of today’s buyers are seeking single-family homes in the suburbs.
Frederick Wehba is an accomplished real estate investor and avid philanthropist. Hailing from humble beginnings, he grew up working in his father’s supermarket, and eventually procured a small store. Through establishing his chain, he garnered a passion for real estate that resulted in the foundation of his own firm, and over $3 billion in transactions. In 1990, Los Angeles Mayor Tom Bradley recognized Fred Wehba as Man of the Year for his, “excellent work ethic and use of his position to pursue altruistic endeavors.” Privileged with the ability to support many esteemed foundations, he and his wife Suzi have been recognized by the Muscular Dystrophy Association, California Baptist University, and the Jeffrey Foundation for their outstanding contributions.