Market Studies for HUD 232 Loans
HUD-approved Market Studies attempt to examine a the economic viability of a property, both by looking at it’s positioning in the current market, as well as the health of the local market as a whole. While in the past, market studies were typically submitted to HUD separately, today, HUD requests that appraisals and market studies be submitted together in one, streamlined report. Typically, market studies have two main components, a HUD Valuation Analysis, and a HUD Market Condition Analysis.
HUD Valuation Analysis
Estimating the project’s market value
Analyzing both residential and commercial rents
Assessing the market need for the project
Looking at estimated expenses and income
Determining whether the property’s income is likely to increase or decrease over time
HUD Market Condition Analysis
The HUD Market Condition Analysis for HUD 232 loans focuses less on the property itself, and more on the surrounding market. To do this, the Market Condition Analysis will look at factors like supply and demand, general market conditions, and the estimated absorption time (for new construction).