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Finance 454: Real Estate Market Analysis

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A Short Course in the Analysis of Residential and Commercial Real Estate Markets ... To develop an analytical approach to identifying and solving real estate problems ... – PowerPoint PPT presentation

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Title: Finance 454: Real Estate Market Analysis


1
Finance 454 Real Estate Market Analysis
  • A Short Course in the Analysis of Residential and
    Commercial Real Estate Markets

Wayne Foss, MBA, MAI, CRE Foss Consulting
Group Email wfoss_at_fossconsult.com
2
Introduction
  • Student Introduction
  • Name
  • Academic Level
  • Real Estate Experience
  • What do you expect to get from this course?
  • Future Goals
  • Instructor Introduction

3
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

4
Course Syllabus, cont...
  • 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

5
Course Syllabus, cont...
  • 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

6
Course Syllabus, cont...
  • Final Grade Weighting Policy
  • Mid-term 30
  • Final Exam 35
  • Course Project 30
  • Class Participation 5
  • Total 100

7
Course Syllabus, cont...
The Final Course Grade will be based on the
following Scale
8
(No Transcript)
9
Class Schedule
  • DATE 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 6
  • Economic Base Analysis
  • 16 Basic Concepts and Real Estate Marketability
    Analysis Ch 11
  • 23 Highest and Best Use Decisions

10
Class Schedule
  • DATE TOPIC ASSIGNMENT
  • Apr 13 Market Analysis for Shopping Centers Ch
    12, 16-17
  • 20 Shopping Centers, cont
  • 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

11
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

12
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

13
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

14
Property Productivity Analysis
  • Site and Improvements
  • Site analysis
  • Legal and Regulatory
  • Zoning and General Plan constraints
  • Location
  • Linkages
  • Urban Growth

15
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

16
Population Forecasting
  • Definitions of
  • Projections (prediction)
  • Forecast
  • Curve Fitting, then extrapolation
  • Six Alternative Curves
  • Forecasts using building permit data

17
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

18
Sources of Demand
  • Employment
  • Manufacturing
  • Services (Office Users)
  • Population Growth
  • Housing Units
  • Shopping

19
Shopping Centers
  • Types of Shopping Centers
  • Tenant Mix and Size
  • Trade Area
  • defined in terms of
  • Primary, Secondary, Tertiary
  • Driving time
  • Total Sales

20
Market Analysis for Housing
  • Market delineation to determine its components
  • Segment housing demand by
  • housing type
  • ability to pay

21
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

22
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

23
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

24
So Thats An Introduction to Real Estate Market
Analysis
Are there any Questions?
Wayne Foss, MBA, MAI, CRE, Fullerton, CA
USA Phone (714) 871-3585 Fax (714) 871-8123
Email wfoss_at_fossconsult.com
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