New Citi GPS Report Looks at Opportunities to Drive Efficiency in the Housing Market

Rhea-AI Summary

Citi has released a report titled Home of the Future: PropTech - Towards a Frictionless Housing Market?, examining the potential of PropTech solutions in the U.S. housing market. The report highlights the need for innovation in processes like mortgage origination and title insurance to enhance efficiency. Significant trends include the rise of home equity investment contracts, iBuyers, and institutional single-family rentals. These innovations aim to streamline transactions and unlock the potential of the housing market amidst ongoing affordability challenges.

Positive

• PropTech innovations promise to enhance efficiency in housing transactions.
• Home equity investment contracts could yield double-digit returns for investors.
• The rise of iBuyers offers instant purchasing solutions for home sellers.
• Institutional single-family rentals are growing, capturing 3% of the market.

Negative

• None.

The housing market has missed the technology wave of the past few decades. But tight supply/demand and affordability concerns following the pandemic are leading to increasing PropTech solutions that drive efficiency throughout the real estate transaction.

NEW YORK--(BUSINESS WIRE)-- Citi today released a new Citi Global Perspectives & Solutions (Citi GPS) report in its Home of the Future series that takes another look at the housing market. Home of the Future: PropTech - Towards a Frictionless Housing Market? covers the emergence of PropTech, or fintech for real estate, in the U.S. housing market.

Home listings went online back in the mid-2000s with the launch of Zillow and that information was opened up to the broader public versus being walled off through protected subscriptions for realtors only. However, other parts of buying a house, such as getting a mortgage or title insurance – is ripe for disruption still.

“The process of buying a house is pretty painful with the large amount of paperwork. And while some frictions in the buying process are healthy, there is a big opportunity to streamline things,” noted Roger Ashworth, Head of U.S. Non-Agency MBS Strategy. “That’s where PropTech comes in – to look for those efficiencies in the market.”

Tech advancements in housing finance operations (e.g., mortgage origination, title insurance) are opening up ways to reduce paperwork and drive efficiency. Meanwhile, blockchain technologies could introduce further innovation, such as through smart contracts and the tokenization of real estate assets.

Other important notes the report covers on the move towards a frictionless housing market are:

• Innovation is happening in terms of business models as well, with the rise of home equity investment contracts, iBuyers (a company that uses technology to make an offer on your home instantly) and institutional single-family rentals (SFRs).
  
  
• Home equity investment contracts could deliver double-digit returns for co-investors of a property, while at the same time helping consumers tap some of the record-high equity in the housing market.
  
  
• iBuyers purchase homes for resale and offer a variety of services to home sellers from offer pricing to renovating.
  
  
• Institutional single-family rentals (SFRs) make up three percent of the SFR market and are poised for growth.

The report serves as a resource for others based on how Citi sees opportunities for advancement in the housing market with the support of tech advancements and investments.

About Citi:

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220628006184/en/

Media:

Susannah Gullette – Citi Research

susannah.gullette@citi.com

Source: Citi

FAQ

What does Citi's new report on PropTech reveal about the housing market?

Citi's report highlights the emergence of PropTech solutions aimed at improving efficiency in the U.S. housing market, focusing on mortgage origination and title insurance.

How can home equity investment contracts benefit investors according to Citi's report?

The report indicates that home equity investment contracts could provide double-digit returns for co-investors by allowing consumers to leverage high equity in their homes.

What role do iBuyers play in the current housing market?

iBuyers are companies that use technology to make instant offers on homes, streamlining the selling process for homeowners as noted in Citi's report.

What is the projected growth for institutional single-family rentals mentioned in the report?

Institutional single-family rentals currently make up 3% of the market and are poised for growth, according to Citi's findings.