Leading and Lagging Economic Indicators. What are the leading and lagging economic indicators at the local market levels, at the Census Block Group, Census Tract, Zip Code, and ½-2-mile radiuses? And how are lagging vs leading economic determined at Growth Maps… The story begins with testing ALL local variables that MIGHT affect commercial and residential prices at the local levels, and the testing, back-testing to determine what affects future prices changes at the Census Block Group levels…Testing all 209,000+ of them, as described in our Free EBook. With over 25 years’ experience in real estate, and having purchased over 40 real estate investments, this is the first step, in determining what local variables affect Census Block Group forecasts. As they say, garbage in, garbage out, and thus the inputs to any forecasting model, MUST take into account leading and NOT lagging indicators.
Leading and Lagging Economic Indicators and New Real Estate Technology
First you need the most current local growth data, then change this data into information and local knowledge then apply advanced marketing so you can learn and separate leading and lagging economic indicators.
Lagging indicators are defined as: A measurable economic factor that changes only after the economy has begun to follow a particular pattern or trend. It is often a technical indicator that trails the price action of an underlying real estate asset, so real estate investors use it to generate transaction signals or confirm the strength of a given real estate trend. For example, day on market, schools, and inventory Trail price changes.
While leading economic indicators are defined as: A measurable local economic factor that changes every month and quarter, before the economy and real estate prices, start to follow a particular pattern or trend….going up or down in value. Leading indicators are used to predict changes in the economy and the most accurate real estate forecast models, but cannot be used singularly or without advanced data scientist filtering the that datasets, or the forecasting models will be to myopic and not always accurate.
With access to the right hyper-local market data and critical growth data and leading economic indicators at the Block Group levels, you can target the right people and Cesnus Block Group, based on their median income growth for example, and find the optimal site selection of any business of location.
At Growth Maps, we take into account very little yearly data, since any yearly data is even WORST than a lagging indicator, since it has none (ZERO) influence on local Block Group real estate prices. And only key local growth data or leading economic indicators like:
- Job Growth at the Block, Tract, and Zip Code levels
- Median Income Growth at the Block, Tract, and Zip Code levels
- Migration Growth at the Block, Tract, and Zip Code levels
- New Business Index Growth at the Block, Tract, and Zip Code levels
- Unemployment Rate Growth at the Block, Tract, and Zip Code levels
- Vacancy Growth at the Block, Tract, and Zip Code levels
Of the above, typically median income growth at the Census Block Group is one of the highest leading economic indicators, since after all, with more income, people and business can buy more goods and real estate, and with less, more people will rent and not move to where there is opportunity.
With better local leading and lagging economic indicators and critical local real estate growth information, smart real estate investors and real estate brokers will make more profits and more commissions and profits.
As always, your feedback and comments are most welcome and appreciated….
Thanks, Eddie G