For many people, purchasing a home is one of the biggest decisions and transforming events of a person’s life. It is also one of the most frustrating and inefficient processes that often takes months to complete with considerable transaction costs. While other industries have evolved to take advantage of new technologies to create timing and cost efficiencies, the real estate industry has yet to benefit from these advancements, continuing to operate at similar speeds and costs as it did pre-internet. The good news is that there are a number of real estate technology companies looking to solve the pain points of a typical real estate transaction, thus providing this and future generations with a much better home buying experience.
Identifying a Home
Zillow launched in 2006 and currently has more than 135 million properties listed in its database, representing more than 29% of real estate-related website traffic.[1] But identifying a home to purchase goes beyond browsing listings, as the next step is typically emailing or calling the broker to see the properties of interest. This is where the inefficiencies come into play, inefficiencies that Matterport, Inc. (Matterport) is looking to solve. Matterport is the leading spatial data company focused on creating interactive 3-D models and tours of real estate properties. These virtual tours allow homebuyers to walk through a property from anywhere, anytime, which helps homebuyers filter out homes that may not be a fit and hone in on the ones that are. With the enhancements of virtual reality hardware from companies like Facebook and Apple, in the near future, the first round of home shopping will be immediate and virtual.
Making an Offer
You just finished a virtual tour of a property and want to make an offer. It’s 2022—you should be able to propose an offer online. Companies like OpenDoor Technologies Inc. (OpenDoor) help facilitate this part of the process. OpenDoor, founded in 2014, has rebuilt the entire consumer real estate experience by making buying and selling possible through its mobile or desktop app.
Paying for the House
According to the National Association of Realtor’s 2021 Profile of Home Buyers and Sellers, 87% of recent buyers financed their home purchase.[2] For first-time buyers, this number increases to 93%. The mortgage process from application to funding takes almost two months on average and is often the part that causes delays in execution. Some lenders such as Rocket Companies (Rocket) are looking to leverage technology to streamline and simplify the mortgage process. Rocket has built a mortgage process that is completely online and can generate a pre-approval for a mortgage within a matter of days. This is important for homebuyers who need to understand exactly what they can and can’t afford.
Investing in these Technologies
With approximately 6.1 million homes purchased in the U.S. in 2021[3] averaged at nearly $400,000, the economic potential for the technology companies innovating around the home buying process is tremendous.[4] The ETFMG Real Estate Tech ETF is the first exchange-traded fund that is designed to give pure-play exposure to technology companies that are digitally transforming the real estate industry in order to optimize the way people purchase homes. The ETF includes 36 global companies including Zillow, Matterport, OpenDoor and Rocket.
For more information on HHH, visit: etfmg.com/HHH.
As of 1/25/22, HHH held 5.36% in Zillow, 1.72% in Matterport, 3.64% in OpenDoor and 4.89% in Rocket. Holdings are subject to change without notice
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by calling 1-844-ETF-MGRS (1-844-383-6477), or by visiting www.etfmg.com/HHH. Please read the prospectus carefully before investing. Securities mentioned may or may not be current holdings in the Fund and are subject to change without notice.
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The Fund is distributed by ETFMG Financial LLC. ETF Managers Group LLC and ETFMG Financial LLC are wholly owned subsidiaries of Exchange Traded Managers Group LLC (collectively, “ETFMG”). ETFMG is not affiliated with Prime Indexes.
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[1] Source: iPropertyManagement
[2] Source: National Association of Realtors
[3] Source: Wall Street Journal
