I really want to know how to perform market analysis?

Question

I really want to know how to analyze a market or neighbourhood in which I'm investing, I'v talked with a lot of people about how to analyze a housing market but I still didn't really understand so I thought this place would be the best option to find. I just want to know how to analyze like how to find out if the demand is high, how do you know if homes are selling fast, how to find out if demand for property in any area rising or falling or how to find out if a neighbourhood is hot or not, I've discussed with a lot of people and they recommend me to use city-data.com which is an excellent website to know about the market but even in that website I don't know what to look for like if the population is 20000 in a city is it good or not or what it should be or what should I type in google to know about a specific market or place?

Nathan Gesner · Answer

BiggerPockets has a lot of information. Did you try to search bar? Have you watched Brandon's videos on Youtube, particularly the "4-square" method?

CLICK HERE for the Ultimate Guide To Analyzing Property

Read, practice, and use the BiggerPockets calculator.

James Storey · Answer

@Jasraj Singh a really good and simple starting point without getting a good agent involved is using https://www.zillow.com/home-va... and do some simple market analysis on a zip code and census track basis. This will give you a starting point of the absorption rate in the areas (days on market) and where property values are generally going in each area. This website also tracks the foreclosures and rent payment and would be a good way to indicate how an area is performing. This isn't a very technical approach but it's a way to start without going to an agent that has access to supply and demand data that is owned by the mls.

After you have done your initial study of these census tracks with this data, I would start to build relationships with some really good Realtors that are willing to work with you and share the mls data of inventory (listed homes) over time vs demand (sold/pending homes) over the same time frame for those particular areas. You can use this raw data and compare to the finding on the site above and come to some conclusion about where the market is moving. In the end it's a supply/demand formula and as there are more sold homes and/or active buyers for homes being listed, prices will go up and days on market will shift lower and lower. It is vis versa for the counter.

Beyond that, you can get into more technical analysis on employment and population that would be more relevant for commercial and larger investment properties but would be still applicable determine the changing demographics  and economic employment base in each area. It encompasses more advanced statistical analysis that is way to complicated to describe in the forum if you don't want to fall asleep but it basically calculates how a new job/employer created would create "x number" of new jobs and thus would create "x number" of new population which would create "x number" of new active buyers (demand). It takes a long time to build these models and probably wouldn't be worth the time it takes to create unless you were doing larger investments and developments.

I hope this helps and wish you the best of luck.

James Storey, CCIM

Keller Williams

Indianapolis, IN

Will Triplett · Answer

Try watching this webinar and ignore the "turnkey" sales pitch unless your are into turnkey investing: https://www.anymeeting.com/Web...

Joanne Eriaku · Answer

Hi Jasraj, I completely understand where you are coming from because my Data analytic brain wouldn't budge without some sort of food(read data). So far I've been able to download ream loads of data from our local real estate association, although that is county level data, it consists of market inventory , days on market, median sales price       , foreclosure rate. Zillow is the one which really broke it down for me to a neighborhood level, I find that to be more helpful than the county level data. Also if you have an agent friend who can help you access the MLS, that data is priceless, you can twist it n turn it to your hearts content. I know that there are some paid data providers too, I just haven't gone that route yet.

Matt Williams · Answer

@Jasraj Singh

I have been speaking on Real Estate Investing all over North America for years. During my 3-day workshop, I do an entire roughly 2-hour component on market analysis.

There are five things I look at when evaluating a market that I am interested in investing in: Unemployment Rate, Average Household Income, Population Migration, Average Days on Market, and Average Sales Price. Those are the five indices that I examine anywhere I’m considering investing.

Now, depending on what types of deals I’m considering, I may also examine vacancy rates and average rental amounts specific to the type of units I might be acquiring.I have to respectfully disagree with a prior comment that Zillow is a healthy tool to use when performing market analysis based on the inconsistencies with regards to the accuracy of the data on Zillow.

Andrew Syrios · Answer

Thanks Jasraj! I appreciate the kind words and am glad you found my articles helpful!

Jasraj Singh · Answer

Just read your message and your whole article about Kansas City and how to discover developing neighbourhoods! The article was amazing and was very informative! Would love to read more of your articles!

Thanks a lot!

Jasraj Singh · Answer

Thanks a lot for the guide man!

appreciate it!

Sudheer Palyam · Answer

Hey @Jasraj Singh, how did you go with this research on performing market analysis? Did you find any reliable data sources (paid or free) that you can share? I am from Australia, I did apply data-driven approach to find investment properties and had made some good investments. Now trying to follow the same approach in US, but not finding sites that can provide consolidated view of data for all standard important factors. Thanks.

Jasraj Singh · Answer

Lol! nice one! I'm from India and will soon be investing in the U.S. Currently learning how to perform market analysis so that I can choose a lucrative market to invest in.i just checked realtytrac and it's good for foreclosures. thanks a lot!

thanks for responding!

I really want to know how to perform market analysis?

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