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The reader should be familiar with methodology that will be employed by GAR Associates in this analysis. If there are differences in regard to the specific project in question, then these should be agreed upon before initiation of the assignment. We have also outlined some general assumptions that are applied within our analysis. It should be noted that GAR Associates is familiar with the requirements of the QAP including their market study guidelines. We have been approved on the DHCR list to perform market studies throughout New York State and have conversed with DHCR pertaining to their requirements.

Generally, the context of our market studies will involve the following components:

Market Study Components

  • A background review of the proposed project. This typically includes a site inspection, interpretation of surrounding land uses, overview of the context of the neighborhood and its relation to the proposed development and other factors.
  • Review of demographic data regarding the site in question and the area. This will include an establishment of the prospective primary and potential secondary market draw regions.
  • Supply analysis outlining and identifying in detail competitive projects within the defined market draw region. We will analyze occupancy rates, rent increases and provide information on recently constructed as well as proposed developments.
  • A demand analysis involving the evaluation of anticipated absorption for new projects and the likely demand for this type of living environment. The analysis will cover community wide trends, neighborhood specific variables, factors influencing demand at other developments and absorption at comparable projects.
  • An appropriate capture rate will be established for the property in question, and an analysis will be made to determine whether or not the market will support a development of this nature in this particular location.

Some notes pertaining to the methodology typically employed by GAR Associates include the following:

Market Draw Area

Typically, GAR Associates utilizes realistic assumptions pertaining to market draw area. We will analyze mobility patterns, physical and sociological barriers of entry, commuter patterns and transportation linkages, and also converse directly with operators of existing developments in order to provide support for the market draw established. Usually, we utilize only a primary market draw area and do not provide contribution from secondary or tertiary market areas as they are not a primary contributor to projects of this nature.

Demographic Data

We will review census documentation, but for the demand model and detailed analysis, we will utilize HISTA data (2000/current year and five year projections). This data is prepared by Claritas in conjunction with Ribbon Demographics and has been found to be useful in regard to identifying specific perspective tenant contribution based on the demand methodology applied by GAR. HISTA stands for “Households by Income, Size, Tenure and Age” and breaks down the census documentation by household size, and income contributions. In addition to the household data we recently obtained population information, which will also be utilized and discussed.

Agency Requirements

We are familiar with the requirements of the agency to which this document will be submitted. Typically, the agencies include the New York State Division of Housing and Community Renewal (DHCR), Rural Development (RD) or HUD. GAR Associates reviews the requirements of these various agencies on a consistent basis, and we attempt to meet with representatives of each agency in order to obtain an update pertaining to any changes in their underwriting criteria. While we do feel that we understand their goals and guidelines, in no way do the results of our analysis guarantee funding or approval from the agency in question. Even if the capture rates and the demand analysis prepared by GAR Associates is indicative of likely project support, there could be other issues or items that preclude the project from receiving such funding as approval and funding for housing developments of this nature as a highly competitive and complicated process.

Demand Analysis

Our demand model typically accounts for what we call a net demand analysis wherein all existing affordable housing is eliminated from the model prior to establishing capture. In order to do this, it is usually necessary to undertake a two-staged income qualification process. This is necessary in order to properly account for all income qualified households who may be likely candidates for a deep subsidy affordable project (where income qualifications as low as zero can occasionally be utilized), and then subsequently for application to the income band specifically applicable to the project in question.

Other variables that are important to recognize include

  • If this report is being prepared for submission to DHCR for tax credit approval and underwriting, we will utilize their income bands as a guideline. DHCR’s underwriters analyze projects based on an affordability range from 30 percent (establishes the upper-end maximum) to 48 percent (establishes low-end minimum affordability requirements), of the gross rent, which is intended. The results of this analysis may differ from tax credit compliance standards, but it will be presented as at least one of the methodologies for tax credit submission.
  • It should be noted that we understand that the income bands apply to State Tax Credit as well as Low-Income Housing Tax Credit projects.
  • If this is a deep subsidy analysis where project-based assistance, a HAP contract or other types of subsidy are being provided, then we will income qualify those units based on a range extending from zero to the maximum allowable levels (Federal Guidelines at 50 percent AMI levels).
  • The demand analysis will break out household contribution by unit type and appropriate household size. The analysis can account for this type of breakdown based on utilization of the HISTA data previously discussed.
  • If this is a senior specific project, the demand analysis will account for all income qualified households aged 55 and above for DHCR compliance. The variables may differ if we are analyzing the development from a market rate perspective, for tax credit purchaser/syndicators, or if a HUD analysis is being applied. When we are analyzing developments with Project Based Section 8 or HUD Funding, the Federal Standards will apply, and we would use age 62 and above for senior specific developments.
  • In regard to age qualification for family projects, we will account for all renter households up to the age of 62. Contribution of senior households will be considered on a case-by-case basis but may apply only to the one-bedroom apartments for DHCR demand model.
  • In regard to senior specific developments we will account for a contribution from existing renter and income qualified homeowners. However, if this is a tax credit specific project for submission to DHCR, we will use the DHCR requirements of a 10 percent homeowner contribution. If it has been agreed that a separate analysis is necessary for tax credit consideration or the developer’s review, we will provide an alternative demand model.

Rent Structure

The demand model in this study will be based on the rent structure anticipated by the developer, under the assumption that the rents forecasted are within compliance with the agency requirements and supported by market characteristics. If not, then we may recommend alternatives.

The only exception to the above is if the purpose of the market study is to establish rent parameters for the developer’s review, in which case we will provide alternatives.

Capture Rate

Capture rates are important for consideration but are only one of a number of important variables that lead to an indication of market support. Generally based on assumptions applied in a standard DHCR report capture rates at or below 20 percent are indicative of likely project support. The lower the overall project capture, the more likely that there are an adequate number of age income-qualified households to support a project. However, there are no set thresholds that necessarily indicate specific approval or acceptance of the development by the allocating agencies.


Scott Allen and GAR Associates are members of the National Council of Housing Market Analysts (NCHMA). This national organization has been instrumental in developing standard model content to be used by market analysts and we abide by their guidelines and standard definitions, which will be outlined in detail within the context of the market study. A certificate stating such will be part of our report. Scott Allen is a member in good standing with this organization.

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