Have a excerpt from an article, followed by a question. I am new to real estate investing and have yet to make a deal. Just wanted some insight from the BP community.
A quote from cnbc.com, "Sales of new U.S. single-family homes rose more than expected in April and the stock of houses on the market hit a 3-1/2 year-high, further signs the sputtering housing recovery was poised to regain steam." It went on to say, "Last month, new home sales jumped in the Midwest to their highest level since November 2007. Sales also rose in the South, but were flat in the West. In the Northeast, sales recorded their largest decline since October 2012." Read the full article at http://www.cnbc.com/id/101700865
My question relates to how does new housing sales or government housing data affect your sentiment towards the overall housing market, not just new home sales? More specifically, what trends or indicators do you look at to understand your target markets?
Thanks and have a great extended weekend!
Great question Andrew. National real estate market news is a dual edge sword. Often you need to know how to filter out the noise and see what is the usable data that relates directly to you specifically and locally. I don't pay too much attention to nation sales figures as it doesn't relate to me personally. I live in Las Vegas and I do play close attention to market conditions here. I look at all types of data like local economic trends ,how many people are moving in and out of town and any new legislative laws that have a direct correlation to our local real estate. Whats really important here is to do your own search. If you rely on others that promote their own interest by doom and gloom you will often be mislead. There is a lot of people like that. I have been in Real Estate for over 9 years.So I make it my business to know all there is about the area I buy and sell in. Trust in your self. Good luck!
Thanks @Carlos Aguilar !
I live in Kansas City, and have heard many members tout the market of KC being "good for cash flow as well as some equity appreciation" or "a hot market". The second part of the article mentioned, talks about strong new home sales in the midwest. I look at it as indictators of employment growth, wage rate appreciation, population growth, or a combination of mulitple factors. As I wade through the mass amount of information for my market, I try to look at it as, "What can I know from mulitple sources of information and my own diligent research that a less educated/informed homebuyer or renter wouldn't take the time to understand. Moreover, how can I, in the lack of a better term, exploit that informational gap to my advantage."
Are there specific sources of information (websites, subscriptions, etc) that you find more helpful than others to understand the Las Vegas market? I previously audited a bank (during 2007-2009) in Las Vegas and found myself amazed at the market information for that area and how the market for SFH took a 40%+ drop in a single quarter.
Thanks again for the post!
@Phillip Dwyer is a great data miner as he is also an appraiser in Vegas. Maybe he can chime in.
I'm not sure I live up to @Tiger M. 's description. There is so much data available to look at, and I've found that many people I network with, including Tiger, all dissect and track different data depending upon what they are trying to achieve. I also think you can get bogged down by worrying about every little data point, and then end up doing nothing while others in the same market made a ton of deals happen. There's a balance to be struck for sure.
On a side note, it seems like all of the media talk about new housing has more to do with promoting stocks in builders than to actually talk about the real estate market. A ton of new construction may boost stock prices for those companies, but that doesn't necessarily mean that the actual real estate market is better.
Thanks @Phillip Dwyer !
I completely agree with you on the new housing starts being used to tout stock prices for the big builders. My question is what sources and trends do you (the seasoned investor) look at to evaluate the actual housing market in your targeted area. Being new to real estate investing, I am trying to avoid the analysis paralysis by understanding what works well from experienced investors. I understand that some may feel a sense of propriety to their metrics or strategy, so I appreciate and and all posts on the subject. Thanks for the post and hope you have a great weekend.
Here's some metrics I track:
1. Average and median sales price per square foot of living for specific areas by month.
2. Average days on market by month.
3. Sales volume by month divided into current inventory to get how many months of supply.
4. % of financed versus cash sales. I break down what types of financing too. This will tell you who your end buyers will be if you're rehabbing/flipping.
5. I do the same for rental data as in 1-4.
I also like to read about things that @Carlos Aguilar mentioned. Relocating businesses, population numbers, ect. are good to know about in general.
my blog shows some of the varied info I look at and discuss with clients. I even watch too many things like even the Baltic Dry index as to winds that will effect us. Here is a link. http://www.biggerpockets.com/blogs/3472-tradewindvegas
I really appreciate the insight. Thank you for the post. What is the best way to aggregate information for #4 on your list? I have been going to realty websites to look at trends which provide me with #1-3, but haven't found a great way to pull #4 into my spreadsheets. I feel like finding a realtor to help with this info would be the better option over getting my RE license. For the unlicensed individual, what would you recommend?
Thanks again, you have been wonderfully helpful!
Thanks for the link, I will read through your more recent posts. I may have some questions or clarifications to help me better understand, would it be okay to connect with you for future questions or clarifications that I will undoubtly have?
@Andrew Erpelding Title companies are great sources of information. I'd reach out to them. They may not break down the data exactly as you would, but they have great tools and info to share.
@Andrew Erpelding a realtor should be able to find this information. However, not all MLS companies have some of those search options IE cash and financed purchases. Title companies can usually provide that information. You can Google a local title company and call in and ask a rep. They usually will provide that information for free and hope that you will use them as a title company for future sales. Here is another site I looked into yesterday more geared toward Realtors but they use about 200 different indicators to determine potential sellers. Not really what you are looking for but a title company should have what you want.
Thanks @Patrick Parry !
Looks like an interesting tool. I would be interested to see the cost of the product. I work in agriculture using big data. Some of the algorithms used to forecast and analyze predicted patterns are truly amazing.
@ Phillip Dwyer thanks for the complement. I agree with him. You definitely don’t want to get bog down with too much info. A lot of great responses here though. Yes, title companies are a good source. I am signed up with a select few that email me every month current real estate sales reports and stats. Other sources of data are your local KC business chamber. Try a local real estate investor club. Here a great source for KC real estate news:
@Andrew Erpelding You've been given some great information already. As they say, all real estate is local. Whatever area you are looking at, you want to get a feel for that specific area. In fact, in some cities there are variations in regard to areas. For instance, here in southern California the "ocean side" of Interstate 5 goes for a higher premium than properties on the eastern side, etc. That's why it's important to know your local markets.
Also, what is your rental market like? Are there a lot of houses, apartments on the market, or is it a tight market? What is the inventory of homes on the market? Not only the number, but dig into what they actually are. What are the ages of homes, areas of listings, etc.? Is there available land on which to build? All of these things factor into markets. It's supply and demand.
@Carlos Aguilar @Patrick Parry I notice that both of you weren't able to @mention the people. First, click on the @and then their name, when it comes up in the window, click on their name and it will be highlighted in the post such as yours is. If that doesn't work, it may be that you need to be a colleague of the person in order to @mention them, so send them a colleague request.
Thank you for the post! I agree, the contributors on this thread have been very helpful and insightful. I appreciate the feedback and will glean all of the information I can to put into practice.
Thanks to everyone that contributed. This helps very much!
As an update, I have been building my network and have found some great resources to assist with my search and even reconnected with an old friend that will help me with MLS access.
@Patrick Parry - The Smartzip tool is pretty amazing. I am trying to find ways to involve listing agents that would buy the total package (marketing & data) and allow me to use the data piece to help them locate homes that are likely to list. With an investor and a listing agent working together with a great predictive analytic data set, the colloboration would work really well. The listing agent would be focused on the higher dollar listings and allow me to target the value deals for a buy/fix/hold strategy. Now I just need to find a few listing agents that I can colloborate with to subsidize my desire for full scale data analytics.
I agree that title companies can offer you a great wealth of data if you give them parameters that you need. also search the web for Market Updates some agents put out good videos etc. Here is a link to my BP blog where I post Market Updates from time to time http://www.biggerpockets.com/blogs/2923-las-vegas-real-estate-market
You can also check out my website for more info about the Vegas market. I try to do my own research and post my opinions about where I think the market is headed.
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