Real Estate Market Trends: Nine Ways To Separate Signal From Noise
Post written by Expert Panel, Forbes Real Estate Council
Successful executives in the real estate industry from Forbes Real Estate Council share firsthand tips & insights.
The market is always fluctuating in some way, but in order to be successful, you must be able to separate signals from noise when trying to understand developing trends. Doing this, however, can be a challenge—you need to know what to look for, as well as what sources you can trust, when you’re doing your research.
In order to help shine some light on what you need to know, members of the Forbes Real Estate Council, below, discuss some ways they recommend staying on top of market trends and fluctuations, as well as discuss why those approaches can help. Here’s what they said:
1. Focus On Your Specific Market
Most market fluctuations and trends that get reported are general and not specific to a particular market. Cities in a region are all micro markets. Even the street to street can yield different market stats. Make sure the information you are referencing or relying on is specific to your market and your goals. – Kofi Nartey, The Nartey Group – Compass
2. Find Experts And Bearish Cynics
In commercial real estate, there’s a cacophony heralding opportunity zones articles every day. But, speak to a tax specialist and you learn that the rules aren’t finalized. Talk to fund organizers and they’re not yet buying. Want to separate the action from hype? Find experts and the bearish cynics, and if there’s more talk about a “moment” than definitive action, that’s your guidepost. – Kristin Geenty, The Geenty Group, Realtors
3. Watch The High-End
Markets are about money. When appreciating, the market moves from the bottom up. When money is available, the lower, mid and high-end are doing well. In a downturn, if the high-end is lagging, it’s an indication that the cycle is in decline. A strong, low and mid-level price market is still possible while high-end is in decline, but it’s a sign of an overall negative trend. – Thomas McCormack, Resources Real Estate
4. Listen To Your ‘Boots On The Ground’
Real estate is a people business, so always remember teamwork makes the dream work. The people on the ground are the ones that are going to be your eyes and ears for a particular market. They are also going to be more of an asset compared to anything you read online. If you select the right market and people they can give you the inside scoop on a daily basis and more. – Engelo Rumora, List’n Sell Realty
5. Educate Yourself About The Economy
As investors and advisors, we need to understand the overall economy to determine what is actually a “signal” or indicator of where the market is headed versus what is just an anomaly or noise and inaccurate analysis. By continuously educating ourselves and looking beyond just the numbers and stats, we are able to add value for both our own portfolio and our clients’ requirements. – Catherine Kuo, Elite Homes | Christie’s International Real Estate
6. Trust In The Numbers
Cold, hard data never lies, and the market is always in flux. So, dig deeply into recent sales data, including comparable percent changes over a 6 to 12 month period, to reveal the real market trends that are impacting your potential opportunities. Focus on property type and micro-market data trends to find the real-deal information that will confidently guide you when setting your sale or purchase target. – Garratt Hasenstab, The Mountain Life Companies™
7. Check Your Sources For Credibility
Seek data from multiple sources, look for consistent conclusions supported by more than one data point and consider sources’ credibility. A research report or national news story should carry more weight than the views of an unknown blogger. All sources are not created equal, and we need to be cognizant of a source’s credibility to cut through today’s content-hungry, 24/7 news cycle. – Gary Beasley, Roofstock
8. Study Ratios
Data by itself is only partially useful. What’s interesting is how they relate to each other. I like to look at the ratios, which combine several different market stats to really distill down what’s going on. For instance, price per square foot is somewhat useful, but price per square foot per square foot will plot out how increased size will diminish the standard PPSF value. – Ari Afshar, Compass
9. Research Master Plan Documents
When I want to get up to date on market trends, I check in on material updates to master plan documents in metropolitan areas with the most population growth. Master plans are the guiding documents for community development and can usually be found on the planning and zoning or development websites for most cities or counties. Maricopa County was the fastest growing county in 2018, which is a good place to start. – Bryan McLaren, Zoned Properties, Inc.