Market Sizing Question: US housing mortgage market ($)

Anonymous A asked on Oct 24, 2018 - 2 answers

I am looking for ideas on how to structure the following market sizing case:

- US housing mortgage market ($)

All ideas are welcome!

Thanks

2 answers

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Pedro replied on Oct 24, 2018
Looking for partners to practice cases on a daily basis.

I'm thinking about the following approach:

- US Pop = 320mn

- Avg People / Household = 3.2

- US Households = 100mn

- Percentage of house ownership = 60%

- Households on a mortgage = 40mn

- Average household value = $1mn

- Total mortgage debt = $40 trillion

It is a simplification of the problem I thought about as I do not have a deep understanding of the mortgage market.

Elias
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updated his answer on Oct 25, 2018
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Pedro's approach is good, yet the assumptions are questionable.

I would put average household size far below 3, more in the direction of 2, maybe 2.5. Makes the math a bit harder, but not terribly so.

Average home value 1 mn? Are you kidding me? I'd assume that it's somewhere around 200-300k.

Also, don't forget that most people don't do a 100% financing, but maybe have 10-30% in collateral.

So with these assumptions (HH-size 2.5, avg home value 250 k, avg mortgage 200k, rest unchanged) I arrive at about 10 trillion.

Cheers

Elias

PS: That answer is A LOT closer to the truth, actually. https://www.marketplace.org/2018/02/13/economy/divided-decade/fed-uneven-housing-recovery-great-recession

(edited)

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