Knowing local leading economic indicators such as migration facts and populations changes could give real estate investors a major leg-up on the competition, but most of this data – it is NOT free, and not online today. Local migration is similar to population changes, but takes into account the latest monthly updated birth and deaths at the local Block or Track level.
Local Migration and Local Leading Economic Indicators Data
Yes, while local migration patterns suggested a growing need for new housing starts and thus legitimately fueled some booms, there were no major spikes in the numbers of marriages, births or even significant wage growth. These are some of the core demographic factors, core leading economic indicators, that affect housing demand in the long term, but real estate investors seem to be paying too much attention to factors that affect short-term demand spikes.
Overall economic conditions (enormous liquidity in credit markets made easy to secure financing) In the end, a number of factors, including greed, helped fuel this over-building bonanza, while the media influenced the boom more than any other time in history.
Local Migration and the media
We will review the usual suspects, but special attention goes to those providing the reporting (investors, quasi-government agencies and the media) and their role in creating or fueling a cult of pro-housing. Builders, realtors, investors and even lenders themselves were influenced by these reports. This ultimately caused more problems than most realize.
Having the most current Local Real Estate Information is important, whether you are a real estate professional or home buyer. And local migration is one of the key pieces of local real estate information that is missing and still missing in 2017.
California Resale Values Increase by 12% in September.
What does that really mean? In almost all cases, this headline is comparing sales from September of the current year to September of the previous year. So, if a home was worth $200,000 last year, it would be worth $224,000 this year, right? Wrong.
The problem is that these statistics have been analyzed in a vacuum. Comparing one month to another month a year earlier ignores all information except what can be reported for those two months. The information is incomplete and without meaning unless you place it into historical context and look at larger trends. It isn’t that the reporting agencies and the media purposely tried to mislead the public or even feed the demand. They simply did not take the time to ask why or how. For instance, why was there suddenly a huge surge in demand? Why we’re housing prices and new starts continually marching skyward at record-setting paces despite historical trends?
Why does local real estate growth data matter?
What matters is current local real estate information, not just property data.
There are 78 million Baby Boomers and they are nearing retirement. Just like the previous generation who migrated to Florida and California to retire in a warmer climate, Baby Boomers are expected to move towards warmer locations. So for years, real estate agents, builders, lenders, investors and the media have promoted new construction homes in Sun Belt states like Arizona and Nevada. And indeed construction has boomed in these states for years, along with other hot spots across the nation. So what’s the problem? Can you imagine every buying any asset without current local real estate information? Millions of buyer did, and still do today, in 2017.
Supply and Demand
The problem is this: What happens to all the empty homes in the colder climates when the Baby Boomers move to the new warmer locations? There was no actual increase in the number of households as a result of the Baby Boomer migration. People are simply moving from one place to another and most still only need one house. But with a glut of new homes being built in the Sun Belt states, the supply of available homes in the colder climates continues to grow. Who is going to purchase these older and relatively expensive homes?
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