1 / 37

MIS 3090: IT for Financial Services

MIS 3090: IT for Financial Services. Real Estate and IT. November 15, 2014. Fannie Mae. Originally the Federal National Mortgage Association, founded by Congress in 1938 part of FDR’s New Deal initiative

chloe-elliott
Download Presentation

MIS 3090: IT for Financial Services

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MIS 3090:IT for Financial Services Real Estate and IT November 15, 2014

  2. Fannie Mae • Originally the Federal National Mortgage Association, founded by Congress in 1938 • part of FDR’s New Deal initiative • Buy mortgage loans from banks and other institutions and package them into mortgage-backed securities which they sell to investors • They independently provide mortgages to people with bad credit or mortgage with unusual criteria such as zero down payment or interest only loans • Traded on NYSE (Ticker: FNM)

  3. Freddie Mac • Federal Home Loan Mortgage Corporation • Competes with Fannie Mae • Also buys mortgages in the secondary market • They also provide mortgages to people with bad credit • Traded on NYSE (Ticker: FRE)

  4. Industry Background Real Estate Industry GDP, 1991 and 2001 * GDP, 1991 and 2001 Contribution to Total GDP PercentOf Total Trillion +70% Note*: The real estate industry includes all economic activity of owners, lessors, lessees, buyers, sellers, agents, and developers of real estate. Companies engaged primarily in the construction of buildings for sale (operative builders) are classified under the construction industry. Source: Bureau of Economic Analysis, U.S. Commerce Department

  5. Annual Change, 1997 – 2002: 4.6% New Home Sales New Home Unit Sales, 1968 to 2002* 1,200 Thousands 600 0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 Source: U.S. Bureau of the Census, 2003

  6. Annual Change, 1997 – 2002: 4.7% Existing Home Sales Existing Home Unit Sales, 1968 to 2002* 6,000 Thousands 3,000 Approx 4 times the rate of new homes 0 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 '00 '02 Source: National Association of Realtors, 2003

  7. Declining Mortgage Rates Mortgage Rates, 1984 to 2003 30-Year FRM 1-Year ARM 86 88 90 92 94 96 98 00 02 03 84 Source: Freddie Mac, 2003

  8. Supply of Homes Increased housing demand kept unsold home inventory at historically low levels. Month’s Supply of Existing and New Homes, 1991 to 2001 8.9 Months Supply 8.1 Existing Homes 4.6 4.1 New Homes Source: National Association of Realtors; U.S. Bureau of Census, 2003

  9. Looking Forward … Single Family Debt-to-Value Ratios, 1952 to 2010e Future housing demand will also be influenced by the increased use of mortgage debt which was expected to continue to rise through 2010. Mortgage Home Value 1980 1952 1960 1970 1990 2000 2010e Source: Federal Reserve Board, 2003

  10. U.S. Immigration Immigration to the U.S., 1950s – 1990s Million Source: Bureau of Citizenship and Immigration Services Immigration into the United States, which continued to grow, will have a significant impact on home ownership rates in the years to come ...

  11. PC Users PC Users Online Growth in Online Use Penetration of Online Search in Home Purchases, 1995 - 2003 * Use of the Internet as an information source in buying a home increased significantly. Homebuyers Searching Online PC & Internet Penetration, U.S. Adults (18+) Percentof Total Percentof Total Source: “2001 Realtors & The Web,” National Association of Realtors; 2003 National Association of Realtors Profile of Home Buyers and Seller; Harris Interactive; Kannon Analysis

  12. Sources of Information Usefulness of Information Sources, 2003(1)(Top Box Response = Very Useful) (2) Where do homebuyers find their information? Percent ofRespondents Note(1): Only of those homebuyers who used each source. Note(2): Agents are licensed sales workers who provide their services to a real estate broker on a contractual basis. Brokers, on the other hand, are licensed business people who sell real estate owned by others. Brokers manage their own brokerage company, advertise properties, and handle other matters related to the business. Brokers manage and supervise agents. The term Realtor is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors. Source: 2003 National Association of Realtors Profile of Home Buyers and Sellers

  13. Information Sought Online Type of Information Sought Online, 2003 When going online, the majority of home buyers searched primarily for information on properties for sale. Percent ofRespondents Source: 2003 National Association of Realtors Profile of Home Buyers and Seller

  14. Value of Online Features Value of Online Features, 2003 Features valued most highly by home buyers searching online were photos and detailed property information. Enter Google Maps… Percent ofRespondents Source: 2003 National Association of Realtors Profile of Home Buyers and Seller

  15. Save to your profile Multiple Photos Finance Tools Extensive Details Jay Burnham Coldwell Banker (Example) 123 Main Street Coldwell BankerResidential Brokerage54 Dodge StreetBeverly, MA 01915 Call me direct: (978) 233-2828 Easy ways to contact mefor more information

  16. Websites Used Websites Used As Information Source, 2003 www.bostoncondos.com Percent ofRespondents Source: 2003 National Association of Realtors Profile of Home Buyers and Sellers

  17. Key Online Competitors … Top Real Estate and Rental Sites, March 2003 Brand/Channel Realtor.com Homestore.com HomeGain.com Yahoo! Real Estate Century 21 RE/MAX Coldwell Banker Apartments.com Rent.com ZipRealty Unique Audience 4,583,000 3,611,000 1,175,000 1,091,000 979,000 767,000 730,000 688,000 567,000 469,000 Time Spent On Site 32 minutes 7 minutes 5 minutes 8 minutes 22 minutes 5 minutes 14 minutes 9 minutes 14 minutes 9 minutes Source: Nielsen/Net Ratings, 2003

  18. Business Model (Homegain) Example of Referral Fee * For example, Realtor receives 3% gross commission on a $150,000 sale • Realtor’s gross commission ($150,000 x 3%) $4,500 • Referral Fee to HomeGain ($4,500 x 25%) $1,125 • Realtor's commission ($4,500 - $1,125) $3,375 • HomeGain charged Realtors $29.95 month to subscribe to the site. • Members receive an average of 30 real-time buyer and seller leads per month. • Leads include such information as address of home for sale, number of bedrooms and bathrooms, approximate total square footage, property type (for example, single family detached), and desired selling price. • Realtors also pay a referral fee to HomeGain if the lead results in a closing. The referral fee is 25% of the gross commission. Note*: Assumes two sides to the transaction and a total commission rate of 6%. Realtor’s commission is before any broker’s split of the commission, if applicable. Source: Company articles and web site, 2003

  19. Annual Change = 10% Real Estate Broker Commissions Estimate of Real Estate Sales Commissions, 1997 to 2002e* The Bureau of Economic Analysis estimated that real estate commissions reached over $67 billion in 2002. The average commission charged on home transactions dropped to 5.12% in 2002 from 5.48% in 2001 In Billions Note*: Assumes a constant commission rate of 6%. Source: U.S. Bureau of Economic Analysis Estimates, 2003

  20. Disintermediation Potential Internet Presence of Real Estate Brokers, 2000 and 2002 The potential disintermediation of newspapers is foreshadowed by brokers’ investments to build their presence online. Percent Of Brokers Source: The 2001 National Association of Realtors Member Profile; The 2003 National Association of Realtors Member Profile

  21. Website Activity Website Activity of Real Estate Brokers, 2002 52% of brokers with websites reported getting at least eleven online inquiries in 2002, but. 70% of then said that no more than 10% of their total business came from their websites. Brokers by Website Inquires Percent of Business From Website Percent Of Brokers Percent Of Brokers Number of Inquiries Percent of Business Generated by Website Source: The 2003 National Association of Realtors Member Profile

  22. For Sale by Owner Most Important Reason For Selling Home As FSBO, 2003 The primary reason cited by sellers for selling direct or FSBO was their desire not to pay agents’ commissions, though a large number also knew their buyer directly. Reasons for FSBO Method Used to Sell Home Real Estate Agent 83% FSBO 14% Home- buying Company 1% Other 2% Percent ofRespondents Source: 2003 National Association of Realtors Profile of Home Buyers and Sellers

  23. For Next Class… • Guest speaker, Mr. Rick Burke from Commerce Bank • Read • Internet Customer Acquisition Strategy at Bankinter • Case questions will be posted shortly

  24. QUESTIONS? ???

  25. THANKS!! GO CATS!!

More Related