Summary: In this article, you will learn how to do local real estate market analysis. Topics include: what local real estate market analysis is and is not?, why they’re important for smart real estate investing, and if you want to use new current market data or not, to determine if you should buy or sell any investment.
In this article: • Introduction: • Step 1: Agree on and define what a Real Estate Market is. • What local factors affect local real estate market and risk? • Step 2: Agree on and define what local factors affect risk • Top leading economic indicators for local real estate market analysis: • The Zip Analyser Solution is a new real estate platform that delivers: • Step 3: Decide for yourself • Ask yourself:
Every real estate investor knows, that one of the most critical parts of any investment is what many gurus call “doing your homework” which in other words means, doing your due diligence, and proper local real estate market analysis. If you invest smartly with all the most current facts your chances of success are very high, if not well…..look at history… Read on and learn something new.
What is local real estate market analysis?
Everyone has an opinion about something, so first let’s agree what local real estate market analysis is NOT. Do we agree it is NOT is property analysis? If so, read on, and I promise you will learn something of value. Property analysis is property analysis, and market analysis is analysis. But many real estate investors and websites confused these two. Many websites like Real Wealth Network get this core concept wrong. Therefore, Step 1, or the first step in local real estate market analysis and market analysis, is to define what a “Market” is.
Step 1: Agree on and define what a Real Estate Market is.
Most real estate investors agree that a real estate market includes Metro markets, Counties, and Zip Codes, but more experience investors also know that there are smaller markets, or submarkets that are below the Zip Code level. These include Census Tracts and Census Block Groups for example. Block Groups are the smallest geographical unit for which reliable household data is available, and contain 500-1000 households or houses.
Additionally every experience real estate investors that the number one, or at least one of the top items to consider in any investment is the local market trends and growth in any real estate market analysis before investing. And every real estate investors knows that an individual property does not initially go up or done in value in isolation or in a vacuum, but changes value as does the immediate local real estate market.
Now that we know what a real estate market is and what local real estate market analysis is, and that these local markets are what influence risk and price changes…. The next question to ask yourself is:
What local factors affect local real estate market and risk?
This answer is a bit tricky for most investors, for even the most experienced real estate investors, since this takes the knowledge of what is online and offline. And know that the most critical data that affect risk is still offline today.
But this is about to change…..which leads to Step 2:
Step 2: Agree on and define what local factors affect risk
Some of the top factors or leading economic indicators that are can be updated every month with offline data include:
Top leading economic indicators for local real estate market analysis:
• Disposable Income Growth – A Leading Economic Indicator and the amount of money that a household has available for spending and saving after income taxes. Disposable personal income is a key leading economic indicators used to gauge the overall state of any given market.
• New Job Growth – is a core leading economic indicator, but must take into account income growth as well. Investments are riskier when job growth and incomes are falling, less risky when they are both strong.
• Net Worth Growth – is defined as assets minus liabilities. It is a concept applicable to individuals and a key measure of how much a household is worth. A consistent increase in net worth indicates good financial health.
• New Business Growth – is based upon the number of new businesses entering a new market/area. Typically this indicator is a good leading indicator of overall growth.
• Population Growth – or the lack of it – has a strong effect on local demand for housing. Investments with strong population and income growth are usually less risky and the combination usually leads to very high growth.
At Zip Analyser combine these and many other core factors every month/quarter to get our 36 Month Real Estate Forecasts that have a back-tested to 98.1% accuracy. With accurate local forecasts, and leading economic indicators, Realtors and investors can limit their risk by assessing the latest growth and forecasts, both locally and regionally.
The Zip Analyser Solution is a new real estate platform that delivers:
• Current market data and growth
• Customizable real-time data visualization platform
• Customizable reports that are inclusive
You can find out for yourself how powerful and beneficial this new platform is by simply going to Zip Analyser and on the homepage type in your or any Zip Code to find the latest New Job Growth which is a leading economic indicator, and should be a key factor in any local real estate market analysis.
Step 3: Decide for yourself
We’ll honestly we might not be the best choice for you. Do your research. For a few real estate investors, maybe old stale data is good enough.
1. Do you feel you know enough information to make a smart real estate investment decision?
2. Have you talked to us?
3. Have you seen our Demo?
With better data, real estate investors will always make better decisions, so now the choice is yours.
Let me know what you think, your feedback is most appreciated.
Eddie Godshalk, CEO of www.ZipAnalyser.com
Zip Analyser – offering real estate investors, brokers, and small businesses, solutions on the exact best place and time, to buy or sell to maximize profits