The most important statistics for one investor aren’t always particularly important to another. For instance, if you want to know “today’s hot real estate market” you can simply google for that statistic. However, by the time you get there, all the best deals will be gone and what drove the market up is probably cooling off. You’re better off finding the underlying statistic that drive these markets and then finding a new and sustainable market rather than a flash in the pan hot market.
Sustained population growth is just such a statistic. There are two major trends driving population growth today and predictably into the future. One is economic opportunity and the other is baby boomers retiring to sunshine states. Even then all things are not equal. Economic growth first drives demand for rental properties. Apartments in particular. If the growth is urban, there is likely to be high demand for luxury apartments. In suburban areas there won’t be as much demand for luxury as there will be for larger multi bedroom apartments. In the sunshine states look for senior communities with activities appealing to retirees. Stay away for temporary population spikes like the ones that happened in the North Dakota and Texas oil fields.
Economic growth needs to be sustainable. That’s the problem with oil fields. If you want in on the spikes, try leasing and then subleasing apartments so that you don’t have to invest capital and can get out quickly. Otherwise, look at long term job growth and other economic factors like interest rates. With rising interest rates, people will still buy in economic hubs but will be able to afford less. And it’s not only interest rates to keep in mind. In general, rent and mortgage payments shouldn’t be much more than 30% of people’s gross income. Your investments should account for all of this.
Population growth is not always the same as economic growth. Especially in the west where considerable population growth in cities is due to annexing suburbs. What you are looking for is combined growth at municipal, county, and zip code levels.
Unemployment rates are important but can be a lagging indicator rather than a forward looking indicator. Unemployment rates tell you how many people are looking for a job. Not how many people have found work in the past 12 or 18 months. With today’s unemployment rates at historic lows, those still unemployed are unemployable for the most part. When the unemployment rate is stagnant but there is real growth in the number of jobs, it indicates qualified people are moving to the area and finding jobs.
Demographics have changed. Investors have been in a rut catering to baby boomers for so long that many are missing out on the shift in demographics. In 2017, Millennials accounted for 33% of homebuyers. By 2025, Millennials are expected to form 20 million new households in the U.S.
A digital revolution isn’t happening. The revolution is over. A big consequence of younger buyers is we now live in a fully digital world. If your investing strategies haven’t made the shift, you’re a dinosaur. This means using drone photography because aerial photographs sell 68% faster than properties with standard images. Today 93% of buyers who are 36 years old or younger use the internet for a house search before talking to an agent. Only those over the age of 51 are likely to first talk to an agent. Still, 90% of home-buying Millennials, Gen X’ers, and young Boomers buy a home with the help of an agent in the end. On a side note, your “About Us” page is the third most-viewed page. Make sure it talks to your prospective clients.
Know your digital footprint. Your website must be search engine optimized (SEO). Not only for Google but also for YouTube. The younger generation searches for YouTube vides almost as much as they google for information. This is perfect for video marketing real estate. There is a ton of information available about driving SEO traffic and finding leads but mostly it comes down to consistent and current content that targets the right keywords.
These types of statistics won’t make you wealthy fast. But if you want sustainable wealth, you need to be in sustainable markets.
What statistics are important to you and why? Please leave your comments
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