What is a Housing Market Study?

Jessica Ellis

A housing market study is an analysis of housing data that may be broad or quite specific. This type of study can be done to gather data on buying and selling trends, the need for new housing construction or renovation, the demographics of homeowners and renters, or to measure consumer confidence in the housing market. Many different types of organizations may conduct a housing market study, from universities trying to find new student housing options, to cities that may want to open new land to housing development.

Home buying and selling trends can be part of a housing market study.
Home buying and selling trends can be part of a housing market study.

There are typically two major types of housing studies, area and specific. Area-wide studies may generate a tremendous amount of data about the market within a given geographical range. These studies are often most useful to local, regional, and national governments, who may need data on housing to determine issues such as interest rates. Area studies may also be helpful to market analysts and organizations such as real estate cooperatives.

Area wide housing studies can generate a lot of information about the market in a certain area.
Area wide housing studies can generate a lot of information about the market in a certain area.

Specific studies are usually project-based, and are often done to test the market for possible changes. A company looking to buy a parcel of land for a large apartment building, for instance, might need to know the demographics of the neighborhood, the housing makeup of surrounding streets, the range of rent or housing costs, and the type of apartments currently in demand. A school that wants to understand why dorms are emptying in favor of off-campus housing might do a housing market study to find out what factors influence on-campus versus off-campus housing decisions.

In order to be useful, a housing market study needs to have specific aims, use efficient and reliable data-gathering techniques, and undergo a careful analysis to help interpret findings. Identifying the aim of the study will help determine which questions need to be asked and what data needs to be gathered; in a campus housing market study, for instance, if the aim is to find out why students are moving off campus, the study will need to find out if issues such as price, availability of options, or need for renovations might be behind the trend. Good data-gathering techniques help reduce the margin of error in results, which can help ensure that solutions derived from study results are accurate and efficient. Finally, professionals with experience in market analysis and forecasting need to examine the raw data to craft solutions and provide recommendations.

A housing market study can have a profound impact on the real estate investment market. National and local studies can help indicate to investors where growth in the housing market is occurring, or where sales are tapering off. Different investors may use this information differently; one might take the opportunity to buy cheap property in a depressed area in the hopes that it will turn around, while another might start investing in areas where growth is anticipated. Some investment analysis groups may release housing market data on a monthly basis in order to help investors stay current with shifting trends.

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