1 Chapter 1 Real Estate and the U.S. Economy

2 Learning Objectives Describe the role of real estate activity in the U.S. economy Cite mortgage and other financial data that indicate the importance of real estate in the economy State how may people work in various aspects of real estate 1-1

3 Real Estate Assets Nearly a fourth of U.S. households assets About 40% of worth of single family residences is mortgage-financed Consists of office buildings, retail facilities, hospitals, hotels, recreational facilities, etc. Single Family Commercial Real Estate 1-2

4 The Nation’s Mortgages In 1999, mortgage debt in the U.S. was $5.86 trillion Household sector owed $4.28 trillion in 1999 In 1999, $2.11 trillion was owed to federally related mortgage pools In 1999, $1.34 trillion was owed commercial bonds Savings institutions hold $646 billion of mortgage debt in

5 Financing America’s Housing Less than 2% of mortgage debt is held by the household sector Nearly half of mortgage debt is held by federally related mortgage pools Mortgage debt held by households declined in the latter half of the 1990’s Mortgage debt held by federally related mortgage pools increased significantly in the latter half of the 1990’s 1-4

6 America’s Housing Con’t. About 40% of the total value of single- family residences are financed by mortgage debt About 25% of the value of multi-family housing is financed by mortgage debt 1-5

7 Financing U.S. Commercial Property Individuals, pension, funds, and other non corporate entities own much of the U.S. commercial property Corporations own substantial amounts of real estate About half of value of commercial properties is financed by commercial bonds Life Insurance companies financed about 16.6% 1-6

8 Employment in Real Estate Industry 1,231,471 employees in the 229,493 establishments Larger employment categories are real estate operates of nonresidential buildings, real estate agents and managers, and real property managers 1-7