Statistical Research Project Ideas Related to Real Estate

11 Replies

Hello BP, 

I am currently not a real investor but am very much interested in becoming one. Right now, I am a junior at a university and have a research project for a statistics class that I am in. At this point, my group and I are still looking for topics we want to do our project on. I would like to do it on something I am interested in, which is of course, real estate investing. However, I don't know exactly which topics to research. 

I am mostly interested in flipping, but was wondering if anyone has any ideas of what to do research on. I am assuming most of you at some point have asked yourself questions regarding the real estate market that you couldn't find the data to answer it, or perhaps the data is not out there. 

For an extremely rudimentary example; "Is there a correlation between average income and the average price of a home in the city of (fill in the blank)?"

So if anyone has any ideas or questions that they feel might suit this project please post them. Also, please post the sources that I could obtain the data from if it exists. 

Thank you in advance to anyone who responds! I hope to use this project to further my real estate investing education so that I too can one day give back to this awesome community here on BP!!!

There are lots of topics/data to explore in the RE world.

When HUD had transparency in their bidding process, back in the broadband broker days, we (my company) analyzed all HUD bids on all properties in NC (100 counties) in an effort to apply some heuristics to our bidding. One question we had... was HUD's accepted bid discount from the listing price different the day after HUD lowered the listing price by 10%? We could answer that question. And a bunch of others...

Other possibilities...

- Correlation of foreclosure sale prices to assessed values in X counties?
- Is the time between the initial foreclosure filing and the actual sale different based on the value of the asset to be sold?

But you will probably want to partner up with a realtor to get access to MLS data. I am not a broker or realtor. My data comes from public record. Sorry I can't help more.

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Personally I would go more macro...

Historically what affordability rates have been a reliable buy/sell signal.

Historically what is the relationship between interest rates and housing prices.

Historically what is the relationship between rents and minimum wage.

I think its easier to get reliable nationwide data than data for a state or city.  

For tons of data, Google "St luis Fed".  Sometimes I geek out and spend hours on that site.

Hi @Hunter Perkinson    - I'm interested to see what your project ends up being so don't forget to let us know when you decide.  I work in the GIS (geographic information systems) field and have been looking at doing some research of my area for my own knowledge.  

One great source for free data is the Census.  and

One statistical question I am curious about is DOM inversely proportional to selling price. 

In other words is it statistically best to price to sell quickly?

This seems to be the Conventional Wisdom that most Real Estate agents will share.  I was reading some book(it might have been a Freakonomics book) that mentioned a study of Real Estate Agent's personal sales seems to suggest that when more than just the commission is involved they tend to let it sit on the market until someone buys it at a relatively high price.

@Jesse T. - Is the question that you are trying to answer "Do more expensive homes take longer to sell?" or "Do homes priced correctly sell faster than homes that are overpriced?".  Either way, I think that this will be hard to answer.  I would assume, on average, that more expensive homes take longer to sell, as the buyer pool is much smaller than your median priced homes.  This can be proven by looking at the distribution of homes sold in different price buckets.  However, with that being said, a luxury home that is competitively priced has the potential to sell faster than an average home that is over-priced.  Other qualitative factors come into play as well, like desirability of the neighborhood, condition of the property, etc.  The problem with analyzing large data sets is that it is difficult to account for these different variables.

I think your question is "Will the cost savings in terms of holding costs outweigh the price reduction on the house I am selling, assuming this will allow me to sell faster". I don't think this is necessarily a statistical problem, rather (like most real estate problems) a situational analysis. There are a few pieces of information you are going to want to know in order to perform the analysis. First, you are going to want to know the trigger price of your home is, aka at what price point will my home be considered FMV and what is the average DOM for homes that are considered FMV. Next, you will need to look at recent sales that, in your opinion, were priced below FMV and determine if these houses sold in fewer days than the average. Pay special attention to price changes and list price vs. selling price, as this could seriously skew the data. You may be able to determine if there is an inverse correlation here that exists between selling price and DOM. With enough data, you could even quantify "a price reduction of X translates into a reduction in DOM of Y". Then, you can determine if the cost savings outweigh the loss of revenue. Without looking at any data, I would assume that the amount you will have to drop your price by will not be recouped cost savings. However, there are many things that could change this.

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