Researching the Market

Sources of Market Data

Once you have framed your research questions, you can start brainstorming how to find the answers. Consider using a mix of data types so you will obtain data that informs you on relevant facts as well as opinions, and data that are gathered with statistical reliability as well as more qualitative but directly relevant data (e.g., gathered from key players in your market, such as real estate agents, lenders and recent buyers). The main data types are:

  • Quantitative: Data expressed statistically and numerically, often generated with scientific rigor to test a particular hypothesis or define a universe. Examples include analysis of MLS data, Case-Shiller Price Indices and the American Community Survey.
  • Qualitative: Data that describes attitudes, behaviors and/or opinions. Examples include interviews with (or surveys of) key informants such as lenders, developers and real estate agents; or web searching a neighborhood name to assess its reputation.
  • Secondary: Data that someone else has gathered for their own purposes, some of which might also serve your own. Examples would include the American Community Survey or someone else’s market study.
  • Primary: Data you gather yourself. An example would be a survey of potential homebuyers done by Hello Housing on behalf of a collaborative of many housing developers in the East Bay area of Northern California to assess consumer preferences. Click here to see a report on their findings.

Most important, however, is to choose the fewest and most relevant data sources that will answer your research questions. It’s easy to get bogged down in the data collection and analysis process if you have a great number of sources and/or sources that are marginally relevant to your project. Whenever it becomes unclear why you are looking at a data source, or what in it is important, go back to your research questions. Streamline your research to the most effective, efficient and current strategies that will answer those questions.

The following table summarizes some common research questions for home sales, relevant data sources, and the implications of that data for decision-making.

Research Questions Some Data Sources How the Data Might Impact Decision Making
The National and Regional Home Sales Market
What socioeconomic trends are influencing all home sales? How do these compare to your local trends? What can you expect to encounter in terms of buyer expectations, demographics, challenges, etc.?
  • Partnership with your regional Federal Reserve office to access market trend data
  • Case-Shiller Home Price Indices
  • Interviews with lenders in your region
  • Annual Survey of Buyers and Sellers published by he National Association of REALTORS® (www.realtor.org)
  • State of Hispanic Homeownership published annually by the National Association of Hispanic Real Estate Professionals
  • State of the Nation’s Housing published annually by Harvard University’s Joint Center for Housing Studies
  • National Association of Home Builders (www.nahb.org)
  • American Community Survey (ACS)
  • This data should help you develop an initial idea of your buyer profile and some possible target markets (more on this in Chapter 6).
  • You will also have a better understanding of the broad market trends that affect all potential buyers, such as population and demographic trends, housing affordability and quality, foreclosure trends, the economic outlook and consumer confidence, and access to credit.
The Current Local Home Sales Market
What local socioeconomic trends affecting the homeownership market? How many homes in your price range are on the market right now? How long does it take to sell a home? What percent of the asking price do homes typically sell for? How often and by how much do sellers lower their price during the listing period?
  • Multiple Listing Service (MLS)
  • Zillow (www.zillow.com)
  • Trulia (www.trulia.com)
  • Interviews with real estate agents, other developers
  • Policy Map (www.policymap.com)
  • American Community Survey and U.S. Census
  • Regional planning agencies and local governments
  • Local newspaper articles
  • The length of time an average home is on the market before it sells may help you budget holding costs. See “days-on-market” figures from a REALTOR® with access to the MLS.
  • The volume of homes on the market in your price range will give you a sense of how much competition you face.
  • The pricing histories on homes in your range will help you create a pricing strategy: how to set an initial price and how to decide whether/when to lower it.
  • Demographic trend information from PolicyMap or the ACS can be compared to national data to see what is unique about your community – for example, a surge in a particular immigrant group might lead you to add marketing in that group’s native language.
Competition
What is the competition – what other homes are for sale in your proposed price range and in what neighborhoods? How do (or should) your homes compare on features, location and price?
  • Tours of several competing for-sale homes and assessment of their features
  • Web search of the neighborhood(s) you are considering
  • School test scores in relevant districts
  • Multiple Listing Service (MLS)
  • Zillow (www.zillow.com)
  • Trulia (www.trulia.com)
  • Interviews with real estate agents, other developers
  • Information you collect from a buyer’s point of view will help you shape your product and marketing.
  • Interviews with real estate agents and developers will give you industry insight into how buyers are behaving in your market – their expectations, readiness to buy, etc.
Recent Buyers
Who has bought a house in the neighborhood(s) you are considering developing homes in recently? Why did they choose the neighborhood and the house? What might that tell you about target markets, home features, pricing, and marketing messages?
  • Interviews or focus groups with real estate agents, other developers
  • Interviews with neighborhood associations
  • Focus groups with recent buyers
  • Interviews with homebuyer educators and counselors
  • Real estate agents and neighborhood associations may be able to tell you who the recent homebuyers are in a particular neighborhood.
  • In a focus group with recent buyers, you can ask questions about the choices they had in neighborhoods and houses, and how they made their decision.
  • Focus groups and interviews with real estate agents, homebuyer educators and developers can help you understand recent buyers’ attitudes and buying habits. For example, you can find out what prospective buyers say to agents about certain neighborhoods, what they will and won’t compromise on, etc.
Potential Target Markets
Who are potential target markets for your homes and what do they want? What might be their obstacles to achieving homeownership? Where can you reach them with your marketing messages? Aare there groups of potentially eligible buyers that you could reach efficiently through an organization, such as major employers?
  • Interviews or focus groups with real estate agents, lenders, other developers
  • Interviews with neighborhood associations
  • Focus groups with recent buyers
  • Surveys of potential homebuyers
  • Interviews with homebuyer educators and counselors
  • PolicyMap (www.policymap.com)
  • American Community Survey and U.S. Census
  • Regional planning agencies and local governments
  • Chambers of Commerce
  • Interviews with others who interact with prospective buyers can reveal major obstacles to homeownership related to down payment requirements, housing stock quality, credit availability, and so forth. This knowledge can help refine your customer profile and begin to identify target markets.
  • You can also find out from these sources about their most successful marketing techniques and whether there are opportunities to partner in marketing.
  • Major employer data can reveal potential marketing partnerships.
  • PolicyMap can identify high-rental neighborhoods where potential buyers may be found.
REALTORS®
What do real estate agents think of this neighborhood(s) and the homes we propose to sell? How do they think it compares to others on the market? What advice might they give?
  • Interviews, focus groups or surveys with real estate agents
  • Agents can give you information on their customers’ and their own attitudes – about your financing and sale requirements, your pricing plans, your marketing ideas, how to make it easy for agents to help a customer buy your homes, etc.
Product Strengths and Weaknesses
What are the strengths and weaknesses of your homes, the blocks on which they are located, and the neighborhoods in which they are located?
  • Tour of several homes in your price range and your assessment of their features (click here for a form to help you compare findings)
  • Web search of the neighborhood(s) you are considering (just type the neighborhood name into a search engine and see what comes up)
  • Walking the blocks on which you have or are considering buying property, at different times of the day and week
  • Conversations with the neighborhood association about benefits of the neighborhood
  • School test scores in relevant districts
  • These mostly subjective data sources can preview for you how a potential customer might evaluate the value proposition of your home; this information might lead you to choose another neighborhood or block, improve the block your home is on, change the home’s features, decide how best to present the neighborhood’s attributes, and so on.
Financing
Who is actively making first mortgages in your community and what are their requirements? What obstacles are buyers facing? How might those requirements affect the way you define your target markets? Are any special financing or subsidies available to increase affordability and/or expand the pool of eligible buyers?
  • Interviews with local mortgage officers and REALTORS®
  • Home Mortgage Disclosure Act (HMDA) data on top lenders by market share, denial rates, demographics of mortgagees, etc.
  • Web search for loan products in your market
  • State housing finance agency products and data
  • Local government, especially community development departments
  • Other developers and homebuyer educators
  • This data should help you refine your customer profile based on the income, credit score and savings requirements to obtain a first mortgage in the current environment.
  • You can also find out which lenders are the most aggressive in lending to low-mod buyers, and which are most experienced with subsidy programs, as well as any special loan products they offer – which can inform your decisions on pricing, defining target markets, crafting messages and strategies and partnering opportunities with lenders.

With a little planning and assistance from team members, you could schedule enough interviews, home tours, and computer time to gather all or most of what you need to know to begin your marketing planning process in one week. Once you’ve gathered your market research, write it up in short and simple language that answers each of your research questions, and then review it with the whole marketing and sales team. Facilitate discussions on how the information might affect your acquisitions, product design, target markets and pricing. Some data collection will be an ongoing process as you explore each step of your marketing plan in more detail.

Click here for a worksheet and sample that can help you create a research plan.

In Chapter 5, we’ll discuss the topic of setting marketing and sales goals by creating a pipeline schedule.