7.5.11 Current Housing Market Conditions

A. The market study must include a comprehensive description of the current conditions of the rental market in the PMA, and of the sales market, if relevant. This description should include a summary statement on the current condition of the overall rental market and of the rent levels in the market of comparable projects, looking at both market-rate communities and affordable units/communities. If appropriate to analyze, subsidized communities in which tenants are not responsible for all rent being charged should be discussed separately from market-rate/affordable communities.

• B. The analyses should include the following:

1. An estimate of the current competitive rental inventory of professionally managed units in the PMA, with data on the number of units by structure type, number of bedrooms, rent levels, year built, and location.

2. A thorough discussion of recent market trends analyzing the following:

   • Current vacancy levels and recent trends in occupancy/vacancy in existing rental projects. Occupancy levels should be reported for market-rate as well as affordable communities, and/or age-restricted communities, if applicable.

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Chapter 7 Valuation & Market Analysis 7.5 Content and Format of the Market Study

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• Absorption experience of recently completed rental developments, including estimates at a project level of per unit per month absorption rates, with particular emphasis on comparable and competitive projects that have entered the market within the past 24 months.

• Current effective rents for comparable and competitive projects, reflecting incentives and utility policies. Include a discussion of rent trends in this inventory during the past 24 to 36 months. The description should identify any services included in base rents or offered at a premium. Where relevant, the report should include information on the extent of rent concessions or similar incentives, particularly in projects in initial occupancy, and must address the impact of concessions on rent levels and whether the quoted rents are overstated due to concessions or other factors.

• Estimated current overall rental vacancy rate and vacancy rate for units similar to those in the proposed project. Significant seasonal variations in vacancy rates, if applicable, should be discussed.

• Discussion of any vacancy or absorption problems in the market, particularly in the segments of the market most relevant to the subject project.

• The impact, if any, of the single family and condominium market conditions, including an analysis of the cost to rent versus to own, and the impact of foreclosures and of the shadow inventory of single family and condominium units.

3. The report must include a map showing locations of existing competing rental projects, projects currently under construction, and those in the planning and development process.

4. If appropriate, analyze inventory, occupancy levels, and waiting list of deeply subsidized communities in the PMA.

5. If appropriate in markets without a significant inventory of professionally managed rental units, provide an overview discussion of the scattered-site rental market that might compete with the subject property, including type of structure, units available, and rents.