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.