There are almost as many ways to develop real estate as there are real estate developers, but it’s important to understand that the market does move in cycles. Today, one type of real estate development could be more popular, or more profitable, than another. Tomorrow, or next year, it could be something else. For that reason, real estate developers need a way to discover what is hot in real estate and where the most profitable opportunities are.
The following list of resources is not exhaustive, but this should get you started in learning where to find the best real estate opportunities right now:
U.S. Census Bureau – The U.S. Census Bureau is a bevy of useful information to real estate developers at any stage of their career. The federal government has statistics on new residential housing starts, building permits obtained, construction spending, and much more. These statistics are available on a national as well as on a local/regional basis. While the information is great information to know, strong indicators of capital expenditure growth and new housing starts does not necessarily mean that’s where the market is going. Huge supply does not mean huge demand, but knowing the trends in new construction development is essential.
Multiple Listing Service (MLS) – The MLS is a tool for real estate agents, but it has local property information that can assist developers in predicting where the market is headed. For instance, you can use the “days on market” metric to judge a slow down in the local market. A lot of properties staying on the market longer means there are fewer people buying homes in that specific local area. A lot of homes selling faster could mean home prices are too low or there is a lot of competition among home sellers, which could indicate a low-supply condition.
There are a myriad of ways to read MLS data to glean trends in residential, commercial, and industrial real estate. It’s a valuable resource.The Bureau of Labor Statistics – The Bureau of Labor Statistics compiles information on occupation trends, unemployment, and other key employment indicators. These are important because a big rise in unemployment could mean a lower demand in new housing starts, especially if people are unemployed for a long period of time. On the other hand, a rise in executive or management level occupations in a particular metro area could spell an opportunity for new residential homes. A rise in retail occupations could mean more commercial real estate opportunities while an increase in manufacturing might spell opportunities in industrial development.
Urban Land Institute (ULI) – ULI is one of the most important organizations for keeping tabs on real estate development trends around the world. They are instrumental in impacting land use policies, keep an eye on real estate development trends, and foster real estate development innovation.
The U.S. Fed – The Federal Reserve publishes the most comprehensive information on economic indicators available. They also establish monetary policy, which impacts interest rates, real estate prices, and many other economic indicators.
Real estate developers must keep an eye on trends from within the real estate sector as well as trends outside of real estate that could have an impact on real estate markets. Understanding how key economic indicators could impact specific real estate sectors such as single-family residential, multifamily, commercial, and industrial is crucial.
Real estate developers also should understand how to determine whether the trend is upward for new construction versus rehabilitation and renovation. Being able to read the signs of the markets will mean more profits in your pocket in the long run. Even watching the latest trends in real estate crowdfunding can help developers identify the best opportunities right now and in the future.
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