I wanted to ask this question because I feel like it may help some of us who may have hit our ceiling when it comes to learning our market better. Obviously real estate is a never ending journey and you’ll never know everything there is to know, but what did you do you learn and understand your local market?
I’m asking aside from reading the staple books that help understand the general concepts of real estate investing and/or brokerage if you’re an agent. I’m both and agent and investor and I’ve heard of strategies from others such as simply driving around their city and neighborhoods to see what’s selling, what’s being built, what’s closing down etc. I’ve also heard of people studying tax records to see what properties in certain areas sold for what prices over a certain length of time, as well as following the news to see what’s happening in the economy and how it may affect the real estate market as a whole.
I’d love to get a discussion going on what everyone has done or currently does to further educate themselves in their market, because knowledge is power and the more we know the more we grow!
Not sure how sophisticated you want to get with your market analysis, but when getting started, I kept it relatively simple and created a spreadsheet of home sales and rents. For each sale and each rental, I'd document #beds, #baths, sqft, sale price / monthly rent, whether it was an apartment/house/duplex, and then take some notes on the condition/style. After a little while, I had a decent summary of how much, for example, a 2bed 1 bath Singe Family with an updated kitchen and bath would likely appraise for, and rent for. Gave me a good line in the sand, but of course, when I would actually analyze a potential deal, I would double check sold properties on ziillow/redfin, etc.
This is all in addition to of course driving the city and seeing what you see.
On a more sophisticated level, the Best Ever Apartment Syndication Book by Joe Fairless (and his podcast) covers pretty well how to do a full market analysis.
Look at nar.org for data
Look for local groups and market data
@Tyler Kennedy you mentioned "the Best Ever Apartment Syndication Book by Joe Fairless (and his podcast) covers pretty well how to do a full market analysis." I looked at the table of contents in the book and a market analysis section didn't jump out at me. Do you recall where in the book this is discussed?
You need to narrow down your market. The problem with people picking a market; it’s to broad. Pick a city and then a neighborhood within the city. You can become an expert in that particular market by focusing on 3/1 sfh or whatever your style your picking from. Having to big an area crossing major streets, changing school districts changes the value.
Start simple look at 3/1 sfh 1 story. Basement or crawl. Square feet within 200 square feet of each other. Siding material, interior finishes, etc.
Compare solds in last 3 months then 6 months and so on. The less time the better. The closest match to your property the better. Sold comps are what matters, not listings or pendings. You need factual data, that is solds only.
@Steve W. Chapters 13-16 cover "Market Evaluation", and chapter 15 specifically covers 7 factors such as unemployment, population, job diversity, supply/demand, etc.
They more or less read the book, or at least excerpts on some of the show episodes. You can find those at syndicationschool.com. Here are the relevant ones.
@Martin Lindsay There is no substitute for getting out in the field and driving your market. You shouldn’t need market data and statistical trends to teach you about your local market. You should know it cold because this is what you do.
Use the market data, trends, and things like this to introduce clients to the market, but even for them the only way they are going to learn what to expect from a market is to get out and drive it.
@Kenneth Garrett Great point and I’m glad you mentioned it. I’ve been reading a book called “Hyperlocal Hyperfast” by Daniel Lesniak and he says the very same thing. He suggests segmenting a certain audience within your market to study and focus on, whether it be an age group common occupations, certain style of homes or geographic location such as a part of town within your city/ larger market.
Definitely helps give some direction as to where to narrow your efforts and energy, as many people can be overwhelmed trying to learn everything there is about a pretty big and busy market.
@Michael Noto Awesome advice Michael thank you! Especially in regards to using statistical knowledge to educate clients about the market to introduce them to what’s going on.
I love that the main “first step” I keep hearing is to simply get out there and drive around. With all the amazing technological tools we have nowadays to analyze markets and study trends and keep an eye on the news and economy it’s very easy to get caught up in believing that some “old school” methods are outdated or less important. As a new agent I certainly looked over this myself, but as I’ve started to do so I’ve realized driving around and observing and taking notes about the area is doesn’t really feel “primitive” or “old school” but instead feels natural, enjoyable and in my case allows me to connect with my local market and neighborhood.
I think you've gotten some good suggestions on learning the local market. In addition, don't forget the power of networking with the local professionals. Talk to the service professionals that serve your niche (aka asset class) in a local market. F.e., if you are searching to buy your MFH, talk to the inspectors, property managers, RE attorneys, insurance agents, even landscapers and so forth that are serving this community. Also, don't forget to network with other RE investors from the local market. For the most part, people are willing to help others so you should be able to get a ton good feedback by going to local REI clubs.
Best of luck!
I agree. All good suggestions. I drive, ride my bike, or walk around taking notes, then keep a spreadsheet with details to remember. After I learn an area, I expand the area and learn the next area over. Definately go by sold data.
I started small and picked a zip code and got to know all the neighborhoods. I just built my knowledge from there. I think there's a temptation to try to get to know an entire market which will not only be incredibly difficult but bog you down with a lot of information that is not really helpful or useful. You don't need to know everything, just the most important things. That's my 2¢ anyways.
@Martin Lindsay I look for Buy and hold SFR in good neighborhoods. I only have one house under my belt and this is how I am continuing to search.
Typically I google the city first, check out the news articles that are coming out. Are they crime ridden?
Then I will google that cities business journal, I.e, Sacramento Business Journal and just read the titles.
Then I go to realtor(.com) and view high schools 10/10, see where they are, then go to 9/10 and see which pop up and so on. I’ll go down to 7/10 just so get an broad idea of the neighborhood. Usually good schools follow good neighborhoods but just incase I lay check the crime map. I also check a 3rd parties crime map also. I haven’t found a great high school in a crime ridden neighborhood yet.
So that’s how I narrow down to a neighborhood.
Then after I find a particular house, I’ll start to google the nearest pet store, target, costco, Whole Foods etc,
I’ll look up local parks and go off the reviews on google maps.
I usually check out the target/parks/schools in the area to get a super general sense of the people there.
Besides what everyone has mentioned above.
I uber around from time to time and talk to people.
I'm a new agent and I look at the "market watch" reports within the MLS system twice a day. This includes new listings, expireds, pendings, price changes, and closings. I can see what is selling fast, what is sitting, what upgrades they have or if they're in bad shape, etc. I am mostly focused on my farm areas but I am always looking for specific buyers and also my investor husband. Knowing days on market and how that is trending is helpful info for us both.
We homeschool so we get around town quite a bit so I am always looking at what is opening or closing, new developments popping up, when builders have started breaking ground, where are the traffic problems, etc. I try to pull off into at least one neighborhood each time we go out so I can see what the neighborhoods themselves are like versus just what is shown in listing photos.
I look at the county auctions for foreclosures and tax deed sales.
I actually look at my junk mail which helps me get a feel for who’s who in town, which restaurants are popular, which other agents are dominating the advertising market, and get ideas for others to partner up with like cleaning services, lawn care people, insurance brokers, etc.
Just always gathering knowledge about the city, whether it helps me immediately or down the road when speaking with a potential buyer or seller. You never know what conversations you might have that end up in them wanting to work with you.
Oh and let’s not forget the local “word of mouth” groups on Facebook...for better or for worse.
I grew up in this city so that works to my advantage but we moved away for about a decade and a lot changed in that time.
Thanks everyone for the great advice and creative suggestions! I think I'm gonna grab my notepad and hop in the car for a little cruise ;)
@Steve W. Chapters 13 to 16.