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| To Understand Housing Demand, Know Location and Segments |
| Written by Jonathan Smoke | |
| 02.06.2008 | |
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Discuss this article on the forums. (0 posts) After yesterday’s post where I described the need to understand both the market and segments of demand, I thought it would be useful to write about what really constitutes a single housing market, i.e., where buyers make decisions about their homes. I would argue that the real action takes place in what we refer to as a submarket—a geographic location with relatively similar housing choices and prices. Such a submarket is usually small. It’s smaller than a zip code or a county.  When we analyze supply and demand, we break up large markets into submarkets that we define using economic, property and demographic data. The submarkets are collections of census tracts. In relatively rural areas, census tracts are a good basis for understanding housing as the Census Bureau intentionally defines them to identify relatively homogenous households. Therefore, they honor things like school districts, which can have a great impact on housing demand differences.So to effectively understand housing demand, you really need to connect specific locations with segmentation information. Here’s a simple and real example. In Savannah, GA, the majority of annual estimated demand for new homes comes from entry level to “move up” type of buyers. Using our consumer groups, we find Entry Level, Simple Life, and Family buyers represent more than three quarters of the total estimated annual demand for new homes in Savannah. Looking at the top demand by census tract, we find wide variation. Family demand is principally concentrated to the north, while Entry Level and Simple Life demand exist in several areas of the market. We can provide this view of new home demand for any market in the country. And if you happen to be interested in understanding new home demand in Atlanta, Charlotte, Dallas, Houston or Jacksonville, you can purchase and download a special report that provides this sort of view as well as detailed descriptions and localized lifestyle information for each consumer group. 
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