Executive Summary
The report covers the Lower Merion Township area with its real estate market characteristics. It examines the projected sales of the common developments in the area, in addition to looking at customer characteristics and competitors. The report evaluates the Oak Hill Condominiums developments, which include the Oak Hill Estates consisting of 135 townhome units that are put up in seven buildings. The other properties by the same developer are Oak Hill Terraces. The report predicts that the occupancy rate will remain at two-thirds of the available real estate space, which implies that developers have to contend with a 70 percent sale in the first year. It predicts that the market should gradually fill the remaining units, although they may have to sell for lower than the prevailing market rates to attract quick customers.
Customers interested in the Oak Hill Condominiums are people who have good access to mortgage facilities by virtue of their professional employment or the income from their artistic pursuits. They are affluent by the standards of Pennsylvania because their incomes are higher than other regions in the state. They are people who will be attracted by the existing forest vegetation around the property and its well-developed infrastructure for accessing the neighboring Philadelphia. The report shows that the location and the style of housing in the project are the main features that attract customers and contribute to a favorable performance in the market.
Introduction
The Oak Hill Condominium housing development has 135 townhomes. Its 314 apartment-style condominiums target affluent people in the Lower Merion Township of Pennsylvania. It is a project that is similar to the Summerlin development Las Vegas, Nevada (Summerlin par. 1).
The mixed development has different attractions, such as the design of the houses and their location, as well as the culture of the township and its predominant white-collar professional characteristic. It is also home to excellent educational facilities that make it attractive to families. The development has four stories and three-story buildings that offer one-bedroom and one-bath units, as well as three bedrooms and three bath units. The mixed development style is supposed to cater for different family sizes and different housing capacity demands for people looking for the same features in the neighborhood.
Project Sales and Market
Occupation rates for Summerlin have been 69 percent from 2009 to 2013. The rate is likely to remain the same for the coming years. It implies that developers of real estates in the area have to contend with a two-thirds occupancy rate for their new developments. It might take many years for them to achieve a full sale of the units built. Thus, they must be looking for additional forms of filling the deficit, such as promoting the houses on discounts and renting them out as they look for the buyers. Nevertheless, the region is known for its homeownership, and it attracts few renters compared to other areas. The high-income class makes it an excellent market for new and existing homeowners, and it provides predictable results. The low population is the main hindrance to sales. In addition, increased developments keep occupancy rates stagnant as they counter the marginal increase in the population of the area. That is why the two-thirds occupancy rate will persist for the coming years.
Lower Merion Township had 24,095 housing units in 2010 and about 22,081 households (United States Census Bureau par. 1). The region also has a high higher education graduation rate, which makes it attractive and home to many people who end up getting good jobs and come back and demand new homes or buy the existing ones. Therefore, the market for real estate is healthy and can remain stable when every other economic indicator stays the same.
The Lower Merion Township registered 1,350,623,000 dollars in retail sales in 2007, which is a rough estimate of the total worth of the market today. Real estate developers can use the value to determine the overall value of the industry in relation to many other markets in the region. In the same year, it had more than 9000 firms providing employment to the residents and incomes to sustain the Township’s economy. Meanwhile, the poverty index places the poverty rate of the area at about 5 percent of its total population, although the figure of persons without health insurance is lower than that of 3.8 percent. It implies that the rest of the population, which is a vast majority, is well off economically and can afford homes when provided with sufficient financial incentives.
The owner-occupancy rate for the township is 76 percent, while the median value of the owner-occupied housing units is 545,200 dollars. This is significantly higher than that of Summerlin, which is 342,300 dollars. By comparison, the Lower Merion Township is a market that is ideal for middle-income earners to upper classes of the population. Therefore, it will remain suitable for gated communities that provide all the necessary amenities in controlled ways that keep residents free from having to deal with the challenges of going to seek services outside their neighborhood. A development like Oak Hill Condominiums is ideal for such a market. Its exclusivity meets the needs of the target market; therefore, its sales are likely to be higher than the market average (Oak Hill Condominium Association par. 3). In addition to its exclusivity, the market does not attract the highest prices in Pennsylvania.
Customers
Where are the customers?
Clients of the Oak Hill Condominiums are people looking for a quiet neighborhood that has the essential facilities for work and leisure or ordinary family life. They are people who are looking to purchase a house in a gated community that can provide security, neighbors, and organized services, such as garbage collection and provision of Internet services. The customers are people who have been residents of Philadelphia or those who have just moved to the city and looking for an affordable place to own. In addition to the affordability of its apartment-style condominium units, the Oak Hill Condominiums provides a luxurious ride that is appealing to wealthy individuals looking for townhomes.
The customers are from all over the United States. Moreover, the customers come from the many white-collar employer organizations in Pennsylvania, which make up the rich white-collar community of Lower Merion Township. At the same time, the customers come from the many non-formal professions, such as artists, designers, media personalities who complement the other category of management, and formal organization professionals. Many of them have access to mortgages, which allow them to afford many of the housing units that come up in the Township. Another characteristic of the area is that it has many specialists in computers and mathematics compared to other areas in the United States. That would explain why there is a demand for tranquil neighborhoods that do not have too much buzzing activity (Neighborhood Scout par. 3-5).
What do the customers care about in Oak Hill Condominiums?
Customers care about the unique neighborhood characteristics and individual designs of the property. Many people notice that the Oakwood neighborhood has a unique feature, like the diversity that exists due to the people who live there. There are notable representations of polish and fresh descendants in the neighborhood, which is a characteristic that is responsible for some of the unique features in the neighborhood. Customers will also be interested in the high number of couples and families that are living in the area, which makes it an excellent community for raising children. The planned development provides spaces for different activities, including ample space for children to play.
Adults will care about the ability to socialize easily with their neighbors because they will be sharing a common neighborhood. At the same time, they will be interested in other owners who have homes and might form a residents’ association with similar interests. In addition, the presence of both townhomes and the apartment condominiums gives the development a mix of both wealthy and middle-class owners and can contribute to lower crime rates, as both classes can invest considerable amounts of money to have standard security measures. At the same time, such economic classes are unlikely to have severe criminal activities, and high teenage delinquency cases compared to lower-income classes.
In addition, customers will be looking for a place that has many owners. So far, the areas have a large number of homeowners living in their homes instead of renting them. Therefore, it presents a good market for buying a new home, as one can grow with the neighbors knowing that they are unlikely to move in the short to medium term. Therefore, it is an excellent place for building long-term relationships.
Customers are keen to be part of the unique neighborhood that offers urban center conveniences and a small-town setting where there are few residents. There are also various attractions in the form of arts and culture. These include exhibitions, bookstores, and festivals. The residents do not mind commuting for long-distance to access other parts of the state. Many have their jobs nearby, or they are attracted by the excellent education facilities available in the neighborhood for their children (Neighborhood Scout 6-7).
Location
The development covers 30 acres of land, besides a forest reserve that is in the care of the Lower Merion Township. The project is near Philadelphia because it is just 8 miles from the central business district. It is located in Gladwyne in Pennsylvania, which is a tranquil location away from the noise of the city. At the same time, it is within reach in a few minutes because of the available infrastructure that allows residents to access the city by road (Oak Hill Condominium Association par. 1). The area sits beside the Schuylkill Express highway in Penn Valley.
What is the Competition?
The area attracts many people described as urban sophisticates, which implies that they are people who seek the urban neighborhood; however, they look for features that were only available in-country homes in the past. In this regard, competition in the industry that the Oak Hill Condominiums is targeting would come from other gated communities in the area that are also targeting these kinds of customers. Any other development offering condominiums and townhouses is a competitor to the Oak Hill Condominiums. For example, the single homes for sale by different realtors are direct competition for the development because they offer almost similar features, except that they are not gated communities. Newer developments are likely to use the mixed development approach of apartments and townhouses; therefore, they offer fierce competition in the area.
Market Segmentation
The market has different segments characterized by the incomes of homeowners and renters and their family types. There are single-parent families or couples, yet to have children, but they are looking for apartment-style condominiums. At the same time, there are families that have grown children, but they are looking for apartments, and they will likely go for the two or three-bedroom condominiums.
Meanwhile, there are families that have extended members living with the nuclear members, and they are wealthy; therefore, it makes them ideal customers for the detached townhouses. In income segmentation, there are wealthy customers looking for townhouses or three-bedroom apartments. On the other hand, there are clients who enjoy middle-class income status and are looking for one or two-bedroom apartments in the area to fit their income (Ling and Archer 200-214).
Customers targeting the apartments will be taking mortgages to purchase the apartments. They are likely to pay about 2000 dollars in monthly payments. Any customer who may pay significantly more than that in monthly mortgage payment will fit into the upper segment of the market. The average value of owned homes in the area is 342,000 dollars, implying that much of the market is in the higher-earning income segment, with no room for lower-income earners. Thus, segmentation mostly follows the essential attractions for middle-class earners, with a little focus on luxury owners. In this regard, much of the developments seek to provide basic housing necessities to meet the demand of the average family size of two to three people. Any family that has more than three people will fall into the upper class of the market.
Conclusion
The Oak Hill Condominiums development provides a balance of class, culture, and affordability, while still retaining its affluent status, as well as exclusivity. The use of stories to house different units makes it an urban development, but the provision of other elements, such as greeneries and wide spaces around the compound, allows residents to enjoy the luxury of semi-detached houses. Its location is ideal for professionals working in the neighboring towns. Additionally, its access to educational facilities makes it ideal for families that have school-going children. It also offers a university that may be attractive to adults seeking to advance their skills. The middle to high-income residential product is an excellent offer for its target market, with no real competition other than the low-density single homes that are on sale in the neighborhood.
Works Cited
Ling, David C and Wayne Archer. Real Estate Principles: A Value Approach. New York: McGraw Hill, 2012. Print.
Neighborhood Scout. “Gladwyne, PA.” 2015. Neighborhood Scout. Web.
Oak Hill Condominium Association. “Welcome to the Oak Hill Condominium Association.” 2013. Oak Hill Condo. Web.
Summerlin. “Overview.” 2015. Web.
United States Census Bureau. “Quick Facts Beta.” 2015. United States Census Bureau. Web.