Finance 454: Real Estate Market Analysis A Short Course in the Analysis of Residential and...
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Finance 454: Real Estate Market Analysis
A Short Course in the Analysis of Residential and Commercial Real Estate Markets
Wayne Foss, MBA, MAI, CREFoss Consulting GroupEmail: [email protected]
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Introduction Student Introduction
Name Academic Level Real Estate Experience What do you expect to get from
this course? Future Goals
Instructor Introduction
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Course Syllabus Objectives
To develop an analytical approach to identifying and solving real estate problems
Course Coverage
techniques of real estate market analysis development of market analysis theories forecasting techniques
Prerequisites Fin 351 or equivalent
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Course Syllabus, con’t... Required Textbook
Market Analysis for Valuation Appraisals, Fanning, Grissom & Pearson
1st Edition The Appraisal Institute
Course Project Market Analysis of a Commercial or
Residential Site Group Project (3 to 4 students to a group) Property of my choice length approximately 30 to 50 pages including
exhibits presentation of findings in class
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Course Syllabus, con’t...
Examinations Type
50% Multiple Choice or True False• Closed Book, Closed Notes
50% Short Answer or Problems• Open Book, Open Notes
No Partial Credit Calculators are permitted, computers are not Make-up examinations are not permitted
Unless there an extraordinary circumstance
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Course Syllabus, con’t...
Final Grade Weighting Policy Mid-term 30% Final Exam 35% Course Project 30% Class Participation 5%
Total: 100%
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Course Syllabus, con’t...
Grade GPA Pctg. Range A+ = 4.0 97-100% A = 4.0 93-96% A- = 3.7 90-92% B+ = 3.3 87-89% B = 3.0 83-86% B- = 2.7 80-82% C+ = 2.3 77-79% C = 2.0 73-76% C- = 1.7 70-72% D+ = 1.3 67-69% D = 1.0 63-66% D- = 0.7 60-62% F = 0.0 Less than 60%
The Final Course Grade will be based on the following Scale:
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Class ScheduleDATE TOPIC ASSIGNMENT
Feb. 2 Introduction -
9 Real Estate Market Analysis Ch 1-5
16 Real Estate Market Analysis Ch 7-9
23 Data Sources for Market Analysis Ch 10 Mar. 2 Field Assignment -
9 Population Forecasting & Ch 6Economic Base Analysis
16 Basic Concepts and Real Estate Marketability Analysis Ch 11
23 Highest and Best Use Decisions
30 Spring Break -
Apr 10 Mid-Term Examination -
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Class ScheduleDATE TOPIC ASSIGNMENT
Apr 13 Market Analysis for Shopping Centers Ch 12, 16-17
20 Shopping Centers, con’t
27 Market Analysis for Housing: Subdivisions Ch 14
May 4 Market Analysis for Office Buildings Ch 13
11 Market Analysis for Vacant Land Ch 15
18 Case Presentations of Project Papers
25 Final Examination
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Market Analysis
Market Analysis is the study of real estate market conditions for a specific type of property A Market Study
Macroeconomic Analysis that examines general market conditions of supply, demand, pricing, demographics of a specific area or property type
A Marketability Study Microeconomic study, examines the
marketability of a given property or class of properties.
Investment Analysis Feasibility Analysis
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Six Step Market Analysis Process
Step 1: Define the Product (property productivity analysis)
Step 2: Define Users of the Property (market delineation)
Step 3: Forecast Demand Factors Step 4: Inventory and Forecast Competitive Supply Step 5: Analyze and Interaction of Supply and
Demand (residual demand study)
Step 6: Forecast Subject Capture
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Levels of Market Analysis
Inferred Demand Studies Level A
more descriptive than analytical Level B
relies upon broad based surveys Fundamental Demand Studies
Level C employs fundamental forecasting
techniques Level D
use of primary research and surveys
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Property Productivity Analysis
Site and Improvements Site analysis
Legal and Regulatory Zoning and General Plan
constraints Location
Linkages Urban Growth
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Highest and Best Use Decisions
Highest and Best Use Analysis Land or Site as though vacant Property as Improved Systematic Approach to analysis
Legally Permissibility, Physically Possible, Financial Feasibility, Maximally Productive
Timing Feasibility Rent
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Population Forecasting
Definitions of: Projections (prediction) Forecast
Curve Fitting, then extrapolation Six Alternative Curves
Forecasts using building permit data
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Economic Base Analysis
Use is to determine the concentration of an industry in a given place
Definitions of: Economic Base Development of Location Quotients
Types of Data utilized Basic versus non-basic employment
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Sources of Demand
Employment Manufacturing Services (Office Users)
Population Growth Housing Units Shopping
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Shopping Centers
Types of Shopping Centers Tenant Mix and Size
Trade Area defined in terms of:
Primary, Secondary, Tertiary Driving time Total Sales
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Market Analysis for Housing
Market delineation to determine its components
Segment housing demand by: housing type ability to pay
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Office Buildings
Building Types Office Building Terms
Gross Building Area Rentable Area Rented Area Net Occupied Space (Useable) Efficiency Ratio
Segment office demand by: type of office building location
ie: CBD vs. Suburbs
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Vacant Land
Physical and Legal determinants of use access linkages land use patterns and community
growth development of a land use plan
including timing for potential development
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Case Presentations and the Market Analysis Report
Case Presentations 3 to 4 students to a group 15 to 20 minute presentation of
findings
The Market Analysis Report Complete Self-Contained Format 30 to 50 pages
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So That’s An Introduction to Real Estate Market Analysis
Wayne Foss, MBA, MAI, CRE, Fullerton, CA USAPhone: (714) 871-3585 Fax: (714) 871-8123 Email: [email protected]