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Lecture 5

REAL 1820 Lecture Notes - Lecture 5: Cbre Group, Royal Lepage

Real Estate and Housing
Course Code
REAL 1820
Jian Zhao

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Residential Market Analysis
1. Overview of Market Analysis
What is market analysis?
It is the identification and study of demand and supply
Demand-side: Who are the end users?
- Buyers (for sale)
- Renters (for lease)
- Their characteristics
Supply-side: Who are the competitors?
- Both existing properties
- Those under development
Demand is more difficult to analyze than supply
Why Market Analysis?
- Demonstrates the potential for a new project
- Provides inputs for preliminary project planning
- Attract investors, debt financing and government funds
2. Demand Analysis
What drives the demand for housing?
- Consumer demographics: population growth, household information, age and family
characteristics, mobility and immigration, lifestyles, etc.
o For example: Smaller families and more one-person households Demand for
adult-oriented housing.
- Economic climate: Employment, industrial growth or decline, changes in mortgage rates,
changes in land use and zoning, and taxation
o For example: Steady employment in sectors like office and retail Commercial
space (office and retail)
What Drives the Decision to Buy or Rent?
It is unrealistic for 100% homeownership, where every family owns a home. There are always
renters in the market.
There are two types of renters:
- Renters by choice: Prefer to rent, not due to financial reasons
o Working couples without children, empty nesters
- Renters by necessity: Must rent due to financial reasons
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