When investors are analyzing a market, they use real estate market insights to analyze that market and predict its potential to appreciate or depreciate.
If you’re a beginner real estate investor, you might not be aware of the real estate market insights that you should learn about each market or where you can gather these insights from.
Real estate market insights are pieces of info that you can gather about a market to gain a better understanding of that market’s performance, growth patterns, and other details that can help you analyze the investment potential in that market.
Related: What Real Estate Market Trends to Look for Before Making an Investment
In this article, I will be talking about some of the most common real estate market insights that are used when analyzing a market, where to find them, and what they mean for your investment.
Real Estate Market Insights: Walk Score
The walk score is one of the most commonly used insights about a real estate market. The walk score of a market or neighborhood helps investors as well as tenants to understand whether living in that area requires a car or not.
A neighborhood that has a high walk score (out of 100) generally means that all the important utilities, such as grocery stores, are within a walking distance for the residents of that area. On the other hand, a neighborhood with a low walk score means that residents will generally need to have a car to move around.
When investing in rental properties, real estate investors will often look for areas that have a high walk score, as it is generally easier to find tenants that want to live in properties where they don’t need a car.
If you’re trying to analyze a market and learn its walk score, the best sources that provide this score for each and every neighborhood are:
To learn more about how we will help you make faster and smarter real estate investment decisions, click here.
Real Estate Market Insights: Crime Rate
The crime rate of a market is a very important aspect to consider when analyzing that market, as it will determine the quality of life in that market and whether it is a desired area to live in or not.
It is only natural to assume that most people prefer to live in areas where the crime rates are low. For this reason, real estate investors will often gather data related to the crime rate of a market before deciding whether they want to invest in it or not.
The best websites for finding crime rate data about each neighborhood you want to analyze are:
Real Estate Market Insights: Cost of Living Index
The cost of living index is one of the less commonly used real estate market insights.
However, learning the cost of living for a market can help you plan your investment and predict the future appreciation/depreciation of that market.
The cost of living index is used to determine the average cost of living in that market in terms of prices, rents, transportation, food and beverage…etc.
This info can also help you determine the optimal rental rate to set on the property. Experienced real estate investors will often use this info to see how much rent a tenant can afford to pay in this area while still enjoying a healthy lifestyle, which can help them set an attractive rental rate on their property to make it compete better in that market.
The best source for learning the cost of living index for each and every market in the US is:
Real Estate Market Insights: Price to Rent Ratio
The price to rent ratio is a metric used for analyzing real estate markets to see whether it makes more sense to rent or to buy a property there.
The price to rent ratio is a very simple metric to use. All you need to know about the market is the average home value and the average rental rate for that area.
This is the formula for calculating the price to rent ratio:
Price to Rent Ratio = Average Home Value / (Average Monthly Rent X 12)
For example, if the average home value in a neighborhood is $150,000, and the average rent is $2,000, the price to rent ratio for that neighborhood would be 6.25.
You can read this article by Investopedia to learn more about the price to rent ratio, what it means, and how you can use it when analyzing a market.
If you’re looking for a good source to use when calculating the price to rent ratio for any market, you can use Mashvisor’s data to easily calculate this ratio for any neighborhood that you’re interested in.
Mashvisor provides the user with the average prices and the average rents per area, so you can use the formula above to calculate the price to rent ratio for any neighborhood with Mashvisor data.
Related: The Best Real Estate Markets to Invest in the US for Price to Rent Ratio
Real Estate Market Insights: Employment Rate
The employment rate is another very commonly used real estate market insight by investors.
The employment rate of a market is the number of employed vs non-employed population in that area.
Generally, the optimal market will have an employment rate that is rapidly growing, as this means that the demand in that market is increasing exponentially, which also means that the prices, as well as the rents, will be going up.
Some of the best sites for learning the employment rate for each state, city, or neighborhood are:
Bottom Line
While a real estate market analysis is the main method used to analyze a market and determine the investment opportunity in it, real estate market insights compliment that analysis by giving you insights about the market, where it’s headed, and the quality of life in it.
Related: How to Perform a Real Estate Market Analysis
As a real estate investor, you should use the sources that you have at your disposal to gather as much info as possible about each market before investing in it. This is an extra step that might take some time, but will definitely pay off and allow you to make wise investment decisions and maximize the return on investment that you can make when investing in real estate.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Also, make sure to check out Mashvisor’s platform, as it can provide you with a lot of real estate market insights that can help you make professional-grade investment decisions, as well as giving you all the analytics that you need for analyzing each investment property and determining its investment potential.
