Market Analysis

Key Findings In A Market Study?

At the very beginning during the land acquisition process, the market analysis is a critical element in evaluating a land opportunity and projected profits.  Whether the market analysis is done in-house or a third-party market study is sought, many key findings should be a result of this analysis.  These findings relate not only to the land acquisition and financial analysis but also to making sure you build and deliver a product that the market wants.

Three of the key findings for land acquisition are the suggested product, projected prices, and a sales/absorption rate estimate.  The supply and demand conditions are typically discussed, as they are essential to understanding these findings that will find their way into a project pro forma.  As well, the analysis should also provide some finding on projected sales price appreciation as a project may be still selling homes 3 – 4 years from the date of the study.

Other key findings are generally more critical to the planning, architecture, marketing, and sales side of the business.  Lot sizes and rear yards can be a big factor in whether a project sells well or not.  The floorplan mix needs to be considered to determine how many floorplans should be offered, square footages, bedroom/bath configurations, garage spaces, number of stories, and other lifestyle elements.

Additional market study findings would be the targeted homebuyer demographics, such as age, family profile, and ethnic preferences.  As well, the level of architecture and home features (spec level) are very valuable in designing and delivering a successful home offering.

Please feel free to share with us your experiences, comments, and questions.