How to Analyze a Real Estate Market with Redfin

Analyzing a real estate market can be difficult. Thankfully, Redfin has created a free tool called reference market insights that uses data from actual home sales to help you understand what's happening in your neighborhood or city. In this video I'll walk you through how to use it so that you can make an informed decision on whether to buy or sell.

Transcription

Ariel Herrera 0:00

Hey everyone, analyzing a real estate market can be difficult. How do you know what the median price of a home is in your area? How do you know if a market is increasing or decreasing, becoming a seller's or a buyers market? And even what amenities exist? These are questions we look to answer whether we are a first time homebuyer or a real estate investor. Luckily, we can use Redfin's market insights as a free tool to analyze a neighborhood or a city. In this video, I'll walk you through how to use reference market insights to analyze your market. My name is Ariel Herrera with the analytics area channel, we bridge the gap between real estate and technology. Both are my passions. And if you're interested to get more information on data tips, how to analyze a market and how to even code in Python, then please subscribe to this channel as well as like this video if you want to see more content like it. Alright, let's get started. In 2020, when the world became fully remote, I decided that I was going to make my leap into a new market. And before I made the decision of what exact city to go to, I looked through many different various sources of which real estate markets were up and coming for the year of 2020. On this page for building them in their tier one markets, they had 50 top markets for real estate investment in 2020. The top ones that I looked at were Austin, Texas, as well as Tampa, Florida. Once I was diving deeper into each of these cities, I look them up within the maps and try to see what neighboring towns around the city itself I could potentially live in. And one town particular stood out to me which was Riverview. Riverview, Florida is only 20 minutes into the inner city of Tampa, so suburb town with a lot of brand new homes and relatively family friendly. My goal is to do the LTR strategy. So live in the property for one year, then rent it out and I want to get a turnkey property that way, there's a lot less overhead for me to deal with. Now the biggest question is as you're comparing markets, how do you know what to actually look at and what to analyze? Redfin actually has an amazing page to allow you to analyze a given market and even down to the zip code. So let's start by looking at Riverview. Once you search on Redfin's homepage and you enter in a city, you'll be met with all the homes for sale within that area. Now there's two key parts here that I want you to recognize. There's market insights and city guide. Let's start with market insights and market insights. We have a load of information and I actually do not see this type of insight easily available on competitor sites like Trulia, Zillow, and realtor.com. Each of the competitors do have their own way of stating this information but not as concise and easily to visualize as Redfin. so on. The first section is trends. And I love that Redfin goes deep into giving us just a paragraph summary. So here we could see that Riverview home prices were up 32% Compared to the previous year, there was a lot of growth, and we could see the median price is 390 1k. This helps us to quickly assess, hey, this market is on the rise. And the medium price, say if I were to wait maybe a year, it could increase even further as we see it's a steady increase year over year. We can also see in the blurb some quick information on inventory. There were 292 homes sold in March this year, which is down from last year. So we see there's less inventory in the market than the previous year, which for me is pretty alarming. Because Riverview has a huge influx and new brand new homes yet we still see less inventory. So really shows how little inventory homes available that we have in this market. And what I love here are these bottom charts. So we could see the median sale price, and we could filter on single family homes here we could extend out to five years and we could see that this area relatively had low costs and median housing around 250 and has exploded ever since

the pandemic a lot of the reasoning is because of low taxes as well as great weather and the ability for those being able to move and take their jobs with them as they've gone remote. We can also see number of homes sold, which we could see it's very cyclical. As we look at the winter months, there's less home sold because of the holidays. And then if we look over at median days on market, we also would expect some cyclical based on seasonality. However, we could see that going into September 2020 There really has been just homes flying off the market. If we look at September 2020, and go back one year to September 2019, houses were staying on the market for about 30 days or so. And the median is five days. So we could see how this market is still very hot. Now go into the demand tab, we could see actually how hot is this market in comparison to other areas, which I love because you can do a side by side and compare maybe two different areas you're interested in, and really compare how competitive each are and maybe which ones you would need to put higher offer versus going asking. So out of 100 score. Redfin has labeled this town as very competitive. They have some more information here and I look over the last 30 days, we could see average home sell for about 3% above list price and go pending in around five days. So if a house is going on the market on Thursday, Friday, it's usually going to be pending by end of the weekend, we can compare nearby cities as well, we could see that the overall market for Tampa has also been pretty competitive, and St Petersburg as well. However, the score of 89 is higher than the other relative neighborhoods, which really shows that people who are moving down to the Tampa area are preferring that suburb areas that are likely moving with their families as well. Redfin also provides great charts for us to understand as demand even further. So let's go back to looking at single family homes, we could see the sale to list price ratio as well, we could look at home sold above list price, if we go back five years, it was relatively always below 20 percents around 15% of homes sold above list price. And as of pandemic, we could see this, this shot up to 60%. And then we could see homes with price drops. But I wouldn't dictate this to say, Oh, this is a falling market. But more so maybe the agent was getting greedy and the buyer and they were putting a price too high. So when download was still sold, we also get a brief overview of some houses that have recently sold, and we could see sale to list if it was under list price. Or if it was over. If we click into the listing, we could also look at the photos. So we can get a pretty good idea of what a house at this price point looks like, say if we decided, hey, we want to invest within this market or we want to live in this market, we could actually look and get insights from recent offers for real estate agents, and maybe contact one of them as well we could look at schools have been the area from elementary all the way to high school, we can look at climate impact. We could see here that about 7% Our homes are already at risk. And what is this risk, heat risk, Storm Risk and low on fire risk and drought risk anywhere in the Florida area, I would expect that you're going to be high on these two. However, they do build a lot of these homes, at least from my knowledge in the last 30 years to be pretty resistant to this, you can again compare to nearby cities. And we could see the score between Tampa and St Petersburg which are within a 50 mile radius. And the numbers are relatively close within the market and sites we could also see transportation. So for a typical suburb, there's usually not that much transportation in terms of subways and bus transit. But we could see here that the score is 15 to 100. So you do need a car in this area. And it's somewhat bikeable, meaning they'd likely have bike lanes or a lot of sidewalks. Now jumping back to the top, we could see that there's a second section which is selected for particular cities where we have a city guide. So let's click that. And the city guide is super important for someone like me who's doing the LTR strategy, I'm going to be living in the property for a full year before I invest it, I want to make sure that in that year, it's going to be enjoyable, I'm not going to be in an area that's super high in crime, or maybe nothing to do. So this really helps to give that overview of what's around here can get a quick overview of the number of people that reside in this town, which is almost 100,000 people, that signals to me somewhere that's pretty expansive, likely going to have maybe more diversity, and probably better food options. We could also see popular neighborhoods within and around Riverview. The property that I purchased and ultimately rented out is in the Boyet neighborhood, which would have been a lot easier to see these scores ahead of time when I was making my analysis. I haven't had as much time to explore this part popular searchers. But I think that's pretty cool. You can quickly filter out properties that are for sale based on certain criteria. So instead of really changing the price range up and down, you could just straight Search for cheap homes and Riverview. This might be good for someone who's looking to say or particularly an investor. You could also look at waterfront homes, which may be important if you're taking an Airbnb strategy. And here we can actually look at what is there to do within this town, they give a great summary up top, and one of my most important things they show were some top places to eat. As well as me being an outdoor enthusiast, I can see some really fun things to do in the area. At the bottom of this page, they do have some really cool real estate tools and resources. This is probably more geared toward someone who's either brand new and investing or their first time buying a property for themselves. But I still think they're really awesome. So let's look at the home affordability calculator here we can get a good understanding of how much house can I actually afford, gives us the power to enter in information of income down payment and the location of where we plan to buy. And we'll be able to get an assessment back of what the price is. So in this case, let's keep everything consistent. And let's type in Riverview. We could see in this case, if we were to keep everything consistent that we'd be able to purchase a property for 250k in the neighborhood. But as we know, we saw previously that the median house is going for 390. So we could either pivot to more affordable areas, or we could adjust some of the numbers and see how we could make it work great. I hope this was a useful overview of how we could utilize some free tools that Redfin provides in order to analyze the market and understand what trends are occurring. And if it's going to be profitable for whatever strategy we're taking, whether we're a first time homeowner or possibly an investor or even a wholesaler. Thanks so much for watching and if you haven't already, please subscribe and like this video if you'd like me to share more free tools just like it thanks