April 17, 2013 By In Uncategorized No Comment

One of the major causes for the recent real estate crash, just like the S&L debacle in the late 80’s, were bad projects/loans made without accurate information showing whether a project could succeed.

It is critical as we begin to pull out of the deepest recession in our history that we are strategic and objective in growing our business models.  It is essential that we understand the requirements for building and operating in the “New Normal,” which is much more stringent underwriting criteria, more sophisticated home buyers, yet less of them in the marketplace.

The consumer is more patient and is more so than ever a student of the “show-me mentality”, so our selection of place, product, pricing, and positioning is critical in order to properly address the home buyer’s need to see value in their purchase and hit additional buying “hot buttons”.

A comprehensive, factual and objective market study is critical, not just a necessity for funding, but a vitally important tool to navigate through the land and lot positions that come available in each submarket.  We can no longer count on the old adage of “If you build it they will come”.   It is critical to have all aspects of the community running on all 8 cylinders, from community development, product development, pricing, sales and marketing and overall project programming.  Your buyers’ experience is critical for the future health of your brand; so don’t take this process lightly.

A thorough study of competitive market conditions can help minimize surprises and provide a “game plan” that is attuned to real demand. It is an essential vehicle to monitor changes in market conditions. By being proactive vs. reactive, we are now able to address trends in new construction, and keep our pulse on proposed developments, land prices, lot to home price ratios, resales and school districting for strong school systems.  It is with this strategic business-modeling tactic that we become more equipped to anticipate market corrections and not ignore the cautionary signs that plagued our industry in the past.

A real strength that sets Strategic Real Estate Advisors (“SREA”) apart in this “new normal” environment is a keen understanding for the need and value that comes with relevant, factual, objective and in-depth market analysis.

As the field of real estate becomes more regulated, objective and far deeper analysis is increasingly demanded. SREA provides the thorough analysis through the deployment of their “boots on the ground” expertise for each client’s project.  If you are unable to answer the question of who your buyer is, STOP.  It is imperative to learn who your buyer is and what their needs are before you spend time and money “hoping” you know.

The goal of any market study is to find the point where supply and demand intersect to supply the right product, at the right price. The lot sizes, location, current use, ownership pattern, and proposed use should all be understood in detail. SREA allows their clients to take it a step further by outlining the community’s unique qualities and market to a targeted market niche so the client is able to differentiate themselves in the marketplace.

Identifying comparable properties when studying a community’s competition is essential. Comparable properties are those sites in the marketplace that have a similar set of features and amenities at a similar scale and price to the developer’s proposed use.  If you are not comparing apples-to-apples you may have false assumptions in your analysis.

Market Segmentation coupled with interior and exterior features are ways to set yourself apart.  SREA identifies for their clients features and amenities that their specific buyer is expecting and expands the features and amenities to ensure that there are “hot button” items that set their clients apart in the marketplace. It is this conscious and subconscious strategic planning that SREA provides for their clients that enhances their clients market share, profitability and time value of money.

SREA’s Market Analysis is invaluable as it provides the client a “real time’ assessment of the submarket in both supply and demand and helps mitigate risk for their clients.

As we all know, the data in a market analysis is critical but the interpretation of the data is the true differentiating factor that SREA provides for their client base.  SREA’s analysis draws relevant, objective, factual, and in-depth conclusions. No single piece of data holds the answer to market demand. In fact, a substantial amount of subjective professional judgment is required to weigh the different elements of the data. SREA has the experience and expertise to make such judgments.  It is these disciplines that remove the emotional, part of the equation from the analysis.  SREA prides themselves in sharing with their clients “What they need to know, not What they Want to Hear.

So it is through vigorous fieldwork, and an objective drill down into the statistical data that is sound, that informed judgment be made. It is critical to remember that, anecdotal data can play a surprising role, sometimes signaling an alert when market statistics still paint a rosy picture. As real estate professionals and stewards of the land we need to continue to pay greater attention to market dynamics because they are fragile and in constant flux.  Tunnel vision can easily take hold, leading to ill-advised decisions. Ultimately, the market rules. That is why the SREA team has their pulse on the market and is keenly aware of what the market is telling us, as the facts don’t lie. 

So why is SREA the company of choice? Because the principals have spent many years on the developers and homebuilder’s side of the table, as owners…we understand the business of successful and profitable real estate development and homebuilding.  Our clients tap into that direct experience because the principals at SREA are the ones conducting the “boots-on-the-ground” analysis; we look at each property analysis with an owner’s mentality as if it were our own decisions that are being made.

Strategic Real Estate Advisors

Your Company Of Choice For Objective, Accurate, In-Depth Market Analysis


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