Finance 454: Real Estate Market AnalysisIntroductionCourse SyllabusCourse Syllabus, con’t...Slide 5Slide 6Slide 7Slide 8Class ScheduleSlide 10Market AnalysisSix Step Market Analysis ProcessLevels of Market AnalysisProperty Productivity AnalysisHighest and Best Use DecisionsPopulation ForecastingEconomic Base AnalysisSources of DemandShopping CentersMarket Analysis for HousingOffice BuildingsVacant LandCase Presentations and the Market Analysis ReportSlide 24So That’s An Introduction to Real Estate Market AnalysisFinance 454: Real Estate Market AnalysisA Short Course in the Analysis of Residential and Commercial Real Estate MarketsWayne Foss, DBA, MAI, CRE, FRICSFoss Consulting GroupEmail: [email protected]Student IntroductionNameAcademic LevelReal Estate ExperienceWhat do you expect to get from this course?Future GoalsInstructor Introduction3Course 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 equivalent4Course Syllabus, con’t...Required TextbookMarket Analysis for Real Estate, Fanning, Stephen F.1st Edition, (2005)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 class5Course 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 circumstance6Course Syllabus, con’t...Final Grade Weighting PolicyMid-term 30%Final Exam 35%Course Project 30%Class Participation 5%Total: 100%7Course 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:89Class ScheduleDATE TOPIC ASSIGNMENTJan. 29 Introduction -Feb. 5 Real Estate Market Analysis Ch 1-5 12 Real Estate Market Analysis Ch 7-10 19 Data Sources for Market Analysis Ch 10 26 Population Forecasting & Ch 6Economic Base AnalysisMar. 5 Basic Concepts and Real Estate Marketability Analysis Ch 1112 Highest and Best Use Decisions Ch 1619 Mid-Term Examination -26 Field Assignment – Projects10Class ScheduleDATE TOPIC ASSIGNMENTApr 2 Spring Break – Yahoo! - 9 Market Analysis for Shopping Centers Ch 12, 18, 1916 Shopping Centers, continued23 Market Analysis for Housing: Subdivisions Ch 15 30 Market Analysis for Office Buildings Ch 13 May 7 Market Analysis for Vacant Land Ch 17 14 Case Presentations of Project Papers21 Final Examination11Market 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 Analysis12Six 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 Capture13Levels 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 surveys14Property Productivity AnalysisSite and ImprovementsSite analysisLegal and RegulatoryZoning and General Plan constraintsLocationLinkagesUrban Growth15Highest 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 Rent16Population ForecastingDefinitions of:Projections (prediction)ForecastCurve Fitting, then extrapolationSix Alternative CurvesForecasts using building permit data17Economic 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 employment18Sources of DemandEmploymentManufacturingServices (Office Users)Population GrowthHousing UnitsShopping19Shopping CentersTypes of Shopping CentersTenant Mix and SizeTrade Areadefined in terms of:Primary, Secondary, TertiaryDriving timeTotal Sales20Market Analysis for HousingMarket delineation to determine its componentsSegment housing demand by:housing typeability to pay21Office 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. Suburbs22Vacant 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 development23Case 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 pages2425So That’s An Introduction to Real Estate Market AnalysisWayne Foss, DBA, MAI, CRE, FRICS, Fullerton, CA USAPhone: (714) 871-3585 Fax: (714) 871-8123 Email: