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How do you size U.S real estate market in 5-10 years?

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Clara
Coach
am 23. März 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I would always recommend you to give it a shot and then post it here, this would help you the most. 

This is a very typical market sizing case, where the key steps are: 

  • Calculate the total population
  • Calculate # people in a household (~3) and # of houses owned per household
  • Calculate the # of transations per year
  • Estimate growth

Calculate the % of the total adressable market that any firm in particular could have -in case it´s asked only-. 

Hope it helps!

Cheers, 

Clara

Ian
Coach
am 22. März 2021
Top US BCG / MBB Coach - 5,000 sessions |Tech, Platinion, Big 4 | 9/9 personal interviews passed | 95% candidate success

Hi there,

For this one you can either measure it now and incorporate a growth rate, or measure it in 5-10 years.

Here is how I would break it down:

  1. US population
  2. # of US households
  3. Split by life stage (single i.e flatshare, young couples, families, empty-nesters)
  4. AND split by income
  5. Then, get a % of each that would own a primary home
  6. Remaining % would rent
  7. This is a good estimate for the total # of houses/apartments...of course, make sure to divide by 2 or 3 for the groups that share
  8. Then, estimate the value of the properties in #5/6/7 to get your answer

Note: Normally splitting by TWO segments is not advised. However, just segmenting by age/life stage OR income is too simplistic here in my view.

Note 2: It's easy to let this get over-complicated. Make sure you structure your math in a clear/organized way...stay as simple as possible!

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