7.5.14 Findings and Conclusions

A. Provide a Project Evaluation. Evaluate the subject property within the context of the site, economic, demographic, and competitive characteristics. Comment on the strengths and weaknesses of the proposed project in terms of location, project size, unit breakdown, unit sizes, amenities, features, and rents.

B. Address the absorption rate, which is defined as a projection of the pace of unit lease up as units become available for occupancy. The study should also include an estimate of the absorption period needed for the project to reach a balanced market occupancy rate (e.g., 5% or the market’s typical stabilized occupancy level based on current market data and the Net and Effective Demand estimates.)

C. The market study must include an assessment of the impact the proposed project will have on existing rental developments. Specifically, the study must address the impact on existing insured properties and show whether sufficient demand will be derived from new renter households, the shifting of households into the rental market, or the replacement of lost or sub-standard units. It must be demonstrated quantitatively that the number of units under construction and the proposed supply, including the subject, will not create over-supplied or overall soft market conditions. Even if the subject does not directly compete with existing insured or uninsured properties, an oversupply of units could spill over into all segments of the market.

D. For age-restricted properties, the market analyst must describe the intended occupancy regime. The MAP Lender’s Underwriter narrative must ensure that the analysis and owner’s intent based on their representations comply with FHA program guidance and Fair Housing law.

E. When projects have a commercial component, the market analyst shall acknowledge and describe the presence of any commercial space. The description should include information on: traffic counts; trends in commercial vacancy rates and commercial rents in the submarket in which the subject site is located; inventory of competitive centers in the immediate vicinity of the subject site; representative sample of rents presently available in the market; pipeline of commercial properties; evaluation of expenditures

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Chapter 7 Valuation & Market Analysis 7.6 Appraisal Requirements

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compared to supply to determine gaps in the market for retail; an opinion on commercial development opportunities on the subject site; and an opinion on achievable rent levels for such space. This level of detail is likely not necessary for commercial space under 5,000 square feet. A more detailed analysis will be completed by the MAP Appraiser. See Section 7.7.14.