Download
chapter 5 residential market analysis n.
Skip this Video
Loading SlideShow in 5 Seconds..
Chapter 5 Residential Market Analysis PowerPoint Presentation
Download Presentation
Chapter 5 Residential Market Analysis

Chapter 5 Residential Market Analysis

101 Vues Download Presentation
Télécharger la présentation

Chapter 5 Residential Market Analysis

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Chapter 5Residential Market Analysis

  2. Major Topics • Demand drivers for home ownership • Drivers of long and short term owner occupied housing market • The decision to buy or rent • The cost of home ownership • Calculating what you can afford • How the government supports mortgage lending and discourages discrimination • Age and ownership • Simple models of multifamily housing analysis • The dynamics of rental housing market • Trends in residential housing

  3. Introduction • Residential structures account for 24% of value of all assets owned in U.S. • Each generation desires bigger and better homes • Average new housing is 25% bigger than what it was fifty years ago • Home ownership rate has been rising steadily • 64% in 1990 to 68% in 2002

  4. Is Home Ownership a Right? • Home ownership is thought to provide not only shelter and comfort but also some degree of financial security, and in some cases significant investment returns as well • In a capitalistic system, no one has a “right to home ownership”, but safe and healthy housing for all citizens is considered a national priority – much like full employment

  5. Long Term Demand for Housing • Demand for housing is a function of: • Household growth rate • General economic productivity • Indicators of housing demand: • Population • Household sizes

  6. Long Term Demand for Housing (Contd.) • What influences Household Size? • People are living longer – more of life spent without children at home • Women outlive men – more widowed single households • People are having fewer children • More women participating in the workforce • Divorce rate in the U.S. has been steadily rising

  7. Regional Demand for Housing Factors leading to absolute and relative growth in the number of households: • Size of existing population • Job Growth (especially within export sector) • Overall Quality of Life

  8. Short Term Demand for Housing • Dominant factors for short term demand: • Mortgage interest rates • Seasonality (climate, schools, holidays)

  9. The Buying vs. Renting Decision Economic Factors • Capital constraints • Expected tenure • Income tax rate • Tax laws for capital gains • Mortgage rates & Financing programs • Investment aspects (expected appreciation) • Budgeting risk

  10. The Buying vs. Renting Decision (Contd.) Psychological Factors • Control over housing unit (design, appearance) • Long term housing aspirations • Ego satisfaction and utility of ownership

  11. How Much Home can one Afford? • Sources of capital : Equity or Debt • The before tax costs of owning a home include: • Mortgage payments (most significant) • Property taxes • Property insurance • Utilities • Maintenance

  12. Federal Government Assistance • VA • FHA • GNMA • FHLMC

  13. Housing Products and Demand Segments Product Segmentation • Single family detached • Single family attached (usually condominium) • Manufactured housing • Mobile homes

  14. Analysis of Housing Market: Demand • Simple Population and Household Trending • Estimating demand based on employment growth

  15. Analysis of Housing Market: Supply Developer Monitoring • Estimating the supply coming online is very difficult due to large number of developers of varying sizes • It is very easy to supply too much housing and the housing market tends to move in cycles

  16. The Integrated Development Model:Short Term Modeling of Demand & Supply • Apart from aggregate market analysis, developers use a simple model: • “Keep building units as long as they sell or rent” • Short term indicators are: • Occupancy rates (conversely vacancy rates) • Waiting lists • Recent rental growth rates

  17. Housing Market Dynamics:Searching for Equilibriums • Supply and Demand are bought together by “price” • Economic principles to understand housing markets

  18. Patterns of Possible Rental Housing Market Changes • Two general processes which bring a market back to long run equilibrium after a change in demand or supply: • Demand increases or supply is reduced • Demand is reduced or supply increases beyond equilibrium levels

  19. Demand Increase or Supply Reduction D2 S1 Rent S2 D1 1st 2nd Supply Q1 Q2

  20. Supply Over-shoots Demand S1 1st Rent S2 D1 2nd 1st 2nd Supply Q1 And Q3 Q2

  21. Senior Housing Options Seniors’ location preference: • Warmer Climate • Low income tax • Close to prior housing location Senior Housing Options: • Active Adult Community Independent Living Housing • Congregate Housing with Assistance • Congregate Housing with Assistance and Nursing • Skilled Nursing Homes • Alzheimer’s Specialized Care Centers • Hospice Centers

  22. Trends in Housing Market • New economy has increased the population of mobile workers • Mobile worker travels frequently and more wealth and higher income • More and more households own second homes today • If this trends continue people will have three or four homes strategically located for business or pleasure • Internet has put pressure on brokerage costs and this may result in increased buy and sell transactions • Senior population has increased much faster and housing suiting their needs will have good demand • A permanent renter market is also becoming more common • Apartments are getting bigger and better

  23. END