1. What is Total Addressable Market (TAM) in Real Estate?

Definition: TAM represents the total revenue opportunity available for a product or service in a specific real estate market.

Purpose: Helps investors, developers, and real estate professionals assess market potential and make informed investment decisions.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( TAM \) — Total addressable market (USD)
• \( N \) — Number of properties in the market (dimensionless)
• \( V \) — Average property value (USD)

Explanation: Multiplying the number of properties by their average value gives the total market value.

3. Importance of TAM Calculation in Real Estate

Details: Understanding TAM helps in market sizing, investment prioritization, and business planning. It's crucial for assessing market attractiveness.

4. Using the Calculator

Tips: Enter the number of properties in your target market and the average property value in USD. Both values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Where can I find the number of properties in a market?
A: Use local property records, MLS data, or real estate market reports from sources like Zillow or Redfin.

Q2: Should I use median or average property value?
A: Median value is often better as it's less affected by outliers, but average is acceptable for quick estimates.

Q3: How does TAM differ from SAM and SOM?
A: TAM is total market, SAM (Serviceable Available Market) is the portion you can realistically serve, and SOM (Serviceable Obtainable Market) is what you can capture.

Q4: Can I use this for commercial real estate?
A: Yes, but ensure your property count and values are specific to commercial properties in your target market.

Q5: How often should TAM be recalculated?
A: Regularly, as property values and inventory change. Quarterly updates are recommended for active markets.