1. REAL ESTATE FINANCE FIN 3334/5334
Professor David M. Harrison
Fall 2009

2. What is Real Estate Finance?
Finance Defined –
Real Estate Defined –
Note: Real Property =
Real Estate Finance is…
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

3. Why is Real Estate Important?
Assets of “Developed Economies” – Year End 2002
Residential Property: $48 trillion
Commercial Property: $14 trillion
Equities: $20 trillion
Government Bonds: $20 trillion
Corporate Bonds: $13 trillion
Total: $115 trillion
REAL ESTATE ACCOUNTS FOR OVER HALF OF ALL ASSET VALUE IN THE DEVELOPED WORLD!!!
Source: The Economist
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

4. U.S. Security Market Size by Sector
Debt:
Commercial Paper: $2.2 trillion
Treasuries: $5.0 trillion
Agency/GSE: $6.7 trillion
Municipals: $2.5 trillion
Corporate/Foreign: $10.1 trillion
Bank Loans: $1.7 trillion
Other: $1.7 trillion
Mortgages: $13.5 trillion
Consumer Credit: $2.4 trillion
Total: $45.9 trillion
Equity:
Corporate Equities: $20.8 trillion
Source: FRB Pub. Z1, Table L.4, 6/7/2007
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

5. U.S. Credit Market Debt by Sector
Source: FRB Pub. Z1, Table L.4, 6/7/2007
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

6. The Environment of Real Estate Finance
Institutions:
Markets:
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

7. The Process of Financial Intermediation
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

8. Warm-up Exercise 4 9 2 7 8 6 5 3 1 David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University

9. Warm-up Exercise: Solution8 4 5 6 3 9 2 7 1
David M. Harrison, Ph.D.
Real Estate Finance
Texas Tech University