How to analyze potential RE markets?

[Omar Diaz]

Hey BP,

I’m getting out of the Army once this contract ends in 2 years and haven’t decided where I want to settle. I’m looking for markets with potential population and housing growth.

How do you go about studying a market in the first place? What are some metrics/key statistics that should tell you good/bad things about a market, i.e. population growth = job growth = more housing, etc.

Any general rule of thumbs when looking at this information?

I know of city-data and neighborhood scout but are there other resources that I could be looking over? Preferably not pay-for-use services.

Thanks in advance for any advice and reading material recommendations.

[Chris Coleman]

@Omar Diaz here are 5 items to review when looking at potential real estate markets:

Population Growth – We want a market in which the population growth is steady and ideally increasing. Definitely not decreasing! Basically, are people moving into this area or away from it?

Employment Growth – Look at the employment trend in the area. Has unemployment been on the rise or has it been decreasing over the last 5 years? In other words, is there solid job growth? Positive trends in employment are a good sign of a growth market.

Diversity in Industry – What are the major economic industries in the city? Who are the major businesses, corporations and employers? Ideally, we want to see a variety of major industries and employers within the market, along with business moving into the area, as this is a positive sign that job creation and growth will likely continue. We generally want to stay away from areas that are dominated by only one industry or only a few major employers.

Rental Trends – What have the last 3-5 years experienced in terms of rental trends in the city? Are rental vacancies increasing or decreasing? Is the city experiencing a growth in rentals, or is it slowing down? Of course, for investing in rental real estate, we want markets with lower vacancies and ongoing demand.

Landlord Friendly - With so many states enacting various types of rent control laws and such, we ideally want to target areas with lower regulatory hurdles for property owners and landlords.

Hope it helps.