How can I solve this case through a market sizing approach? Case: Market size of real estate in the US

Market sizing real cases
Neue Antwort am 14. Aug 2019
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Firas fragte am 7. Aug 2019
Experienced interviewers only (min 30 cases) Preference for heavy quants and market sizing

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Paul
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antwortete am 14. Aug 2019
Project Leader at BCG - 5 years consulting experience|Coached 300+ candidates |Interviewer at BCG | 2nd Session free

Hi Firas,

first of all I would ask the interviewer to clarify whether the market size is in

- Dollar term

- Number of house sold (volume term)

Also when we say real estate, I would ask whether this include only new houses sold around the country or also the rent market.

Let us assume no rent market included

One approach ("top down") could be

- Start from US population

- Come up with a # of people x household

- # of houses = US population / # of people x household * (I am assuming a tiny percentage of people lives under a bridge etc... not uber precise)

- Now you should make an hypothesis about the % of house ownership in the US (lower than europe I guess) to segment the market of people that have a house

- YOu can now use the "useful lifetime" rule and come up with an avg. number of years in which people stick with the same house (you can segment population if a single number is too rough)

- House sold / bought every year = Total House owned in US (see above) / avg. # of years people stick with the same house

This is just the "real estate - buy a house" market. I think you can now imagine how to size the rent part

Alternative possibility is to start with population, segment by age and assing a # of house per age bracket (e.g. no age below 18) and the once again go through the house ownership / house renting % to get to the market size.

Hope this helps.

Write me if not super clear.

Regards,

Paul

War diese Antwort hilfreich?
kira am 18. Sep 2019
nice

Paul

Project Leader at BCG - 5 years consulting experience|Coached 300+ candidates |Interviewer at BCG | 2nd Session free
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