1. Residential Market Analysis
Lecture 4
Residential
Market Analysis

2. Types of Residential Units
Single-Family Detached
Single-Family Attached
Multifamily Housing
Manufactured Housing
Mobile Homes

3. Facts of Residential Real Estate Markets
Residential structures account for about 24% of the value of all assets owned in the United States (value approximately $6 Trillion)
Neighborhood stability often presumed in areas where a high proportion of housing units are owned
Average square footage of homes in the U.S. has increased nearly 25% in the last 50 years to approximately 2,200 sf.
Approximately 68% of Americans own their home. This percentage has increased from 64% in 1993.

4. Long-Term Demand for Housing
Function of:
Number of households
Household growth rate
General economic productivity of income of the typical household

5. Long-Term Demand for Housing
Year
Population
Average Household Size
Households
1900
76,212,168
4.40
17,320,947
1950
151,325,798
3.47
43,554,000
2000
275,601,802
2.65
104,000,680

6. Long-Term Demand for Housing
People living longer
People having fewer children, decreasing household size
Divorce rate increase

7. Regional Demand for Housing
Three factors leading to absolute and relative growth in the number of households:
Size of the existing population provides momentum to the level of absolute population growth
Job growth correlates to the growth in the number of households
Overall quality of life and cost of living in a region

8. Short-Term Demand for Housing
Two Dominant Factors:
Seasonality
Mortgage interest rates

9. Seasonality: Residential Home Sales
Average Monthly Sales
Springtime housing sales tend to run 40% higher than in December
120%
100%
80%
60%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

10. Short-Term Housing Demand: Mortgage Interest Rates
Rather than buying a cheaper house as rates rise, many buyers choose to wait and hope rates decrease
When interest rates are decreasing, many potential buyers wait in hopes that rates continue to decrease, then will purchase when rates increase in fear of continued rate increases.

11. Lecture 4
Buying Versus Renting

12. Renting Versus Buying: Initial Misconceptions
Not enough capital to purchase
Overabundance of square footage
Property maintenance and costs

13. Economic Factors Affecting the Buy/Rent Decision
Capital Constraints
Expected Tenure
Income Tax Rate
Mortgage Rate Expectations

14. Economic Factors Affecting the Buy/Rent Decision
Investment Aspects of Homeownership
Budgeting Risk
Psychological Factors

15. Government Regulation and Housing Demand
Lecture 4
Government Regulation and Housing Demand

16. Federal Government Regulation
Fair Housing Act
Redlining
Community Reinvestment Act
FIRREA
RESPA

17. Lecture 4
Senior Housing

18. Senior Housing
By 2050, the 85 and older population will have increased 300% from year 2000.
1 in 5 Americans in year 2030 will be 65 or older
Senior segment of the economy outspends young segment
Senior income increased by Social Security and Medicare, etc.

19. Senior Housing Housing Desires of Seniors
To locate near friends, relatives, doctors, hospitals
To locate in safe areas
To locate near shopping and entertainment
To have privacy, and options for socializing

20. Senior Housing Housing Options for Seniors
Active adult community independent living facility housing
Congregate housing with assistance
Congregate housing with assistance and nursing
Skilled nursing homes
Alzheimer’s specialized care centers
Hospice centers

21. Lecture 4
Future Housing Trends

22. Future Housing Trends
More workers required to travel, paired with low interest rates, creates a demand for second homes
Decrease in brokerage costs from the internet
Fast growing market segments: Seniors and households with no children
Permanent tenants evolving from changes in upscale rental units