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Lecture 4

Lecture 4. Residential Market Analysis. Types of Residential Units. Single-Family Detached Single-Family Attached Multifamily Housing Manufactured Housing Mobile Homes. Facts of Residential Real Estate Markets.

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Lecture 4

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  1. 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

  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. 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

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