What is a market?

[Greenback]

Here is a fun one...

What constitutes one market? I'm being serious, what is a market?

Is one piece of property a market? One lot, one house on the one lot; is it a market?

Or, does Real Estate have to have boundary for it be called a market; example - neighborhood boundary?

During an analysis, is each comparable sale or even each similar sales, considered a market? The subject property and 3 comparable sales can mean there are 4 markets portrayed in the analysis grid?

Exactly, what is a market?

I'm done, I'm ready for opinions, facts, and additonal explanations.

 

[Michigan CG]

Thread moved to more appropriate location.

 

[Terrel L. Shields]

A "market" must be a delineated segment of transactions as it relates to the product (real estate).

That "market" can be defined geographically, but importantly it also must be defined demographically and within a defined period. Perhaps the URAR brackets it correctly as proximate, similar, and recent sales.

The market has to relate to a pool of buyers and sellers who can afford to play in that market, financed by persons lending in that market, and doing so within a current market paradigm.

Buyers in a mountain resort condo are not the same "market" participants that would be looking to buy a starter home near their place of employment.

 

[Mike Boyd]

I agree with Terrel. Ask yourself: would the buyer of the subject have had an interest in buying any of the comps had they been available? If not, why? If yes, why? The market CAN consist of the neighborhood, but, more importantly, it is the demographics of the prospective buyer.

 

[Greenback]

A "market" must be a delineated segment of transactions as it relates to the product (real estate).

I like that...that makes sense.

Mr. Shields, do you have to group 3 or 4 properties together in a basket to call it a market? Or, can you throw one property in a basket and call it a market?

 

[Greenback]

...more importantly, it is the demographics of the prospective buyer.

You are referencing to the sales approach principle of Substitution, that's what I'm getting when I read your post/reply. Would you call it a substitute property with its own market but with smilarities that may attract some demand from other similar properties that may be a comparable? or a substitute property in the same market, as that of the subject property?

 

[Mike Boyd]

Same COMPETING market. But, mainly just another comp. I would not use the word "substitute." If the comp is across town, I typically write...." comp x is in the same competing market area with neighborhood characteristics similar to those of the subject." I also explain why I had to go to that area......." no recent sales of properties similar to the subject found closer. Comps used are the best available."

 

[Greenback]

...Same COMPETING market.

That catches my eye. Thank you for replying again, Mr. Boyd. Please, don't stop replying if you want to say something else or see something you want to comment on about prior posts.

 

[larryhaskell]

I agree with Mike and Terrel but I like the term "similar, alternative, competing market area."

 

[Mztk1]

Markets are defined by supply and demand. Simply, a market is the demand for a competitive supply.

In real estate, a competitive supply can be limited to a block or less of properties, or it can be larger including statewide, nationwide or worldwide.