THE SCIENCE OF ACCURATE REAL ESTATE FORECASTS

Overview:

Real Estate Forecast 2021

Zip Analyser change hard-to-find datasets into visual information, and finds “unseen” correlations, to help businesses gain insights and strong strategic advantages.  Our propriety dynamic data mapping software takes a quantum leap in real estate investing and decision making. We have identified the 11 economic and demographic factors shown to have the greatest impact on future value of LOCAL residential and commercial real estate. With our 98.1% accurate local forecasting models, user generated ranking technology, and user generated heatmaps, investors will finally be able to make smarter decisions, no matter if the local market is going up or down in value, in their backyard, or 3,000 miles away.

Previous risk models are antiquated, filled with false assumptions, do not take into account local market conditions or trends, and historically proven to fail terribly. Most critical location-based data is neither online, nor available to brokers or investors, in a usable format.  Businesses need accurate local predictive models, to properly assess today’s and tomorrow’s risk. Without knowing the future and what affects local markets, businesses and commercial real estate investors are left uninformed, and the in the fog of risk.

Why Local Real Estate Forecasts are so Critical

Real Estate Forecasts Critical

Typically, any large metro market forecast has HUGE swings and errors when compared to any local market forecast.  For instance, the metro market of San Francisco had a forecast of 7.1% growth for the 36-Month period from XXXX to XXXX. But the San Francisco metro market has over one thousand (1,000) local markets. We tested and back-tested, forecasts on over 5-year time periods. The range of 36-Month Forecasts during the same time period, the local forecasts ranged between (-16.87% to + 23.54%). Thus the true error of the 7.1% forecast is off by OVER 20% at the local Census Block Group level.

Nearly all major cities of the USA, have over 1,000 local markets and Census Block Groups.  Since all major cities have a large population, and the Census Block Group has around a population of 1,000.

Local MATTERS!

Many times, any demographic, economic, and forecast at the large city, metro or DMA level, has over a 300% error, compared to the local market data and forecasts.  To clearly demonstrate this fact, is your income last month the exact same as the median income in your city last month?  Or is it different?

How We Do It – Overview

Real Estate Forecasts How We Do It

Over 10,000 hours of research, development and testing was invested in creating our weighted and predictive forecast reports. First, we aggregated years of monthly datasets from many reliable sources. We then build and tested different predictive models on over 360,700 local markets, with combinations of advanced mathematical processes. The result was identification of 11 combined economic and demographic factors that have the greatest impact on future property values. This backend powers our unique technology, capable of delivering accurate local forecasts and the “reasons why” any local market will go up or down, in the future. A picture is worth a thousand words, seeing the future in a real-time data map, is worth more!

Our Real Estate Forecast Accuracy

The Zip Analyser forecasting system tested hundreds of variables to find the ones that best predicted movement in the future prices of home values.    For over three years, Zip Analyser has back tested the system in order to improve the results and improve the probability accuracy ranges.  Typically it takes four years of monthly/quarterly Census Block Group data to develop 36-months Census Block Group forecast with back-tested Probably Accuracy ranges.

Accurate Forecast Models are built in a similar manner and process.

Macro inaccurate Forecast Models use simpler linear processes and do not take into account current monthly/quarterly demographic and economic data and growth data like the monthly changes in populations, and median / disposable income, at the Census Block Group OR Census Track levels.  Companies like Core Logic, Moody’s, Local Market Monitor, and Neighborhood Scout all have inaccurate Forecast Models at the local market level.  The comparison table in below shows the competition analysis of current Forecast Models today.

Competition Matrix

Real Estate Forecasts Competition
Real Estate Forecasts Competition

If you have any question about the above or anything, please contact us, we are here to help.

Our Forecast Models take into account all changes over time at the Census Block Group (BG), Census Tract, Zip Code, County, City, Metropolitan Statistical Area (MSA), State, and National levels.   Only by looking at all these models over time and instantaneously, can these accurate local real estate Forecast Models be properly tested and developed.

Identify variables most important to real estate investors. The ultimate variable list used in Zip Analyser’s Comprehensive Real Estate Forecast Reports was derived at through extensive mathematical testing and Sensitivity Analysis. A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable (in this case Future Value of a property) under a given set of assumptions….

By testing each variable in the dataset, we were able to determine which variables have a consistent influence on the model, resulting in the 11 key variables used in our forecast model.

These monthly undated factors include:

  1. Affordability Growth
  2. Disposable Income Growth
  3. Gross Domestic Product (GDP) Growth
  4. New Job Growth
  5. Labor Force Growth
  6. Median Income Growth
  7. Net Worth Growth
  8. New Business Growth
  9. Population Growth
  10. Unemployment Rate Growth
  11. Vacancy Rate Growth

We combine these core 11 variables every month/quarter to get our 12, 24, and 36 Month 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.

Benefits of Accurate Local Real Estate Forecasts

  • Dynamically spot cool and hotspot segments within any market.
  • Make smarter real estate investments and greater profits
  • Eliminate the guess work and manual labor to accurately determine current and future residential and commercial real estate price values
  • Current hyper-local market data not out-of-date market forecasts and stale reports to predict market trends to give the investor a competitive advantage
  • Discover your true risk and expected ROI, instead of simple single variable linear trends
  • Capture the biggest gains in the shortest time by discovering hot local spots in order to get higher ROI in any market.

Combined accuracy of the Census Block Group Forecast Models and National Forecast Model

Real Estate Forecasts Combined accuracy
Real Estate Forecasts Combined accuracy

A comparison of past predictions against true values over the last 36 months has resulted in an assignment of confidence numbers to Zip Analyser forecast. The accuracy ranges from 0.986% to 4.065%.

If you’re considering using improved forecasting in your decision making process, we know you have questions.  You may even have concerns.  But you can stop worrying because that’s why we are here to help.  We want you to be informed.  We also want you to be relaxed and knowledge.  With a much better understanding of the answers to the questions that have been on your mind.

Decide for Yourself

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.

Ask yourself:

  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 and real estate forecasts, 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

http://old.zipanalyser.com/ccontact-us/

http://old.zipanalyser.com/request-demo

https://www.linkedin.com/in/eddiegodshalk

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