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Lecture 5

REAL 1820 Lecture 5: Note 5 - Real Estate

3 Pages
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Department
Real Estate and Housing
Course Code
REAL 1820
Professor
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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Description
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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