Finding Good Real Estate Market Data

[Aberham S. Dadi]

Hi!

I'm a software/data engineer with a background in finance and business development. I started looking into real estate investing a few months ago and encountered some hurdles with getting accurate and local data all in one place, at a price for a beginner like myself. I'm interested in all the normal stuff: demographics, employment, mapping, zoning, supply and demand, and the value of property improvements in specific markets, both historical and current. I was wondering if any one else has too and would love to talk about it!

There's been a lot of advancement in technology and data systems that could potentially result in a low cost solution and I would be interested to understand what data problems other investors are facing. If you find yourself resonating with this, shoot me a PM and we can set up a time for a short chat.

If there are tools out there, especially ones with good historical data, that you already know of, please share them so everyone can check them out.

Thanks!

[Leo R.]

@Aberham S. Dadi for a bit of background, I'm a RE investor, and I have a long background in doctoral-level statistics and data analysis.

Here's the issue from my perspective: most data that's relevant to REI (e.g.; employment trends, appreciation/depreciation history, housing supply, etc.) is relatively macro (it often covers at least an entire metro area), but real estate is hyper local.  For instance, the appreciation potential / depreciation risk, tenant demand, neighborhood quality, etc. can all vary dramatically within a single metro area. As an extreme example, consider how Hollywood is a different universe from skid row--even though they're both in the same metro area! 

Another example: during the recession, there were some metro areas that depreciated significantly, but within those metro areas were certain neighborhoods (often the A neighborhoods) that didn't depreciate at all--or that even appreciated.

So, the macro data you typically encounter can be useful, but it often doesn't tell the whole story.

To be a successful real estate investor, I need to understand my city like the back of my hand--with significantly more precision than what macro data would convey.  For instance, I know exactly what types of tenants (ages, occupations, income levels, even political affiliations) are attracted to various neighborhoods within my city--and I know exactly what types of properties those tenants will (and won't) want to rent. ...most macro data doesn't show you that level of detail.

...and that's just market-level data. MOST of my REI decisions (decisions to buy or sell a property, for instance) are governed by specific characteristics of the property itself. For instance, I sometimes look to buy properties that have a "weird" floorplan that turn other buyers off, but which I know I can easily fix to force appreciation and/or rent--that might be THE deciding factor in whether I buy the property, but there isn't ANY data representing that factor!

There's just so much fundamentally important info about REI that most data don't convey (Zillow discovered this the hard way, when they tried and failed to invest in real estate based largely on data inputs, rather than boots-on-the-ground knowledge).

Real estate is literally a physical item, with physical functions, governed by physical realities, and because of that, it can only be fully understood through physical means (seeing properties with your own eyes, experiencing neighborhoods in person, meeting potential tenants face-to-face...or at least on Zoom). Similar to how we can't convey the beauty of a sunset with data, and we can't (yet) convey many of the most important idiosyncrasies of real estate with data...le sigh.

Now, does that mean we shouldn't pay attention to data? Definitely not--the data can provide invaluable context and enhance our understanding of the market, and I study macro data consistently.  Plus, there are many ways to research local markets, and I regularly collect my OWN, more fine-grained data (e.g.; number of responses to an ad for a rental in neighborhood A versus neighborhood B, etc.)   ...BUT I know the data isn't going to provide me with a full understanding of the local markets, or the existing and potential value of a property. To get that, I need to experience the market and the property for myself (which, in my opinion, is the best part of real estate investing!)

Good luck out there!