How to Identify Emerging Real Estate Markets with Permit Data | Jordan Bean

Are you looking to invest in the next real estate hot spot? Check out this video, where Jordan Bean and I discuss how to track emerging real estate markets using county permit data and census data.

Ariel Herrera 00:00

How do you find the next emerging market in your area? When I moved from New Jersey to Florida, my main focus was getting into a neighborhood that was on the rise. I did this through looking at many news articles on new development. However, there's a way more data driven approach to take. And in this episode of attacking real estate podcast, Jordan Bing is going to give us an overview of how to identify real estate market trends using building permits permit data is publicly available, so you'll be able to follow the same steps that Jordan took within your own market. My name is Ariel Herrera analytics area channel, we bridge the gap between real estate and technology. If you enjoy data driven insights to help grow your business, then please subscribe as well as like this content if you want to see more of it. All right, let's get started. Hey, everyone, welcome to the analytics area channel. Today we have a special guest, Jordan bean. Welcome to the channel, Jordan.

Jordan Bean 00:59

Thanks so much for having me. I'm excited to be here.

Ariel Herrera 01:01

Yeah, it was super interesting when I got to recently read an article that you posted about identifying permits, and being able to see emerging markets based off of that data within real estate. But before we touch into your analysis, which I find super interesting, I want to hear a little bit more about your background and how you got into the field of analytics in general.

Jordan Bean 01:22

Yeah, absolutely. So I started my career in consulting and a lot of work on the business strategy side. And I noticed that analytics just wasn't really used in a way that could empower those decisions. And so I doubled down on it, I went for a master's degree in Business Analytics, part time, I moved into corporate analytics, and really just found it fascinating to figure out what are the new questions the analytics can solve? Where can it bring value, and real estate in particular is one that is a really interesting field right now for where analytics can be valuable.

Ariel Herrera 01:52

Awesome, and how did you get into like programming or like being able to work with data? Have you always liked working with data? Or is it like a steady introduction into it?

Jordan Bean 02:02

Yeah, it was a steady introduction. So I had no computer science background, I had no programming background. But about a year or two out of school, I was kind of thinking, hey, I have all this business knowledge. But what's a tangible skill that I can build up and learn? And at the time analytics was really at the forefront of what can I do in organizations? And how can it be powerful, and I noticed that there are just so many limitations with Excel, I thought I could do things. But then I started to learn programming. And I went, Oh, my God, my world of what can be done, just exploded. And it was really exciting to think about, what are the new problems that we can solve? What are the faster ways the bigger datasets we can use? So for me, it was really, where does my interest lie lies in numbers. And I found that going beyond Excel just opened up all these new opportunities. So I just started from scratch and tried to learn what I could. And that's what I find exciting about programming is I really think it's a learned skill for someone that wants to put in the time that wants to find these topics interesting, and something that they can learn.

Ariel Herrera 03:00

Yeah, I completely agree. I also had a little bit of a late jump into programming, but some of the misconceptions that you have to start by age like 11, behind the computer programming, definitely not the case. But going back to your blogs that you've recently posted, one in particular, where you were looking at your own market, which is Raleigh, North Carolina, correct? Yep. Yeah. Can you give a little bit more of what was your problem that you had going into this? And how are you able to use data to solve it?

Jordan Bean 03:28

Yeah, so I moved to Raleigh a little over a year ago, like many people from the Northeast, and as I look around, it's just it's a booming community. I mean, there are cranes everywhere. There's development everywhere. And I was in a conversation with an old classmate of mine. And he was talking about someone that sells into commercial builders, they sell a track equipment, electric equipment, something like that. And he goes, Man, it would be great if they had access to permits, which tells them where developments going to happen next, and who they should be connecting with. And I thought, well, that's a pretty interesting concept. And so I went to the city of Raleigh website, and I wanted to really understand what's out there. And as I pulled the data, I found that it goes all the way back to 2000. And we can get into what a permit is and why it's valuable here. But I just thought that the idea of a permit has to be filed in order to do any type of large scale development. So if we have enough of that data over enough time, and we can put it on a map, what can that tell us about where it goes next and where it's been and help us really track what movement looks like in a city, particularly somewhere like Raleigh that has experienced such incredible growth and continues to be developed?

Ariel Herrera 04:31

Excellent. Yeah, that framework makes complete sense. And just as you stated, if you could give a bit of background on what are permits, and how do they help us gauge new development?

Jordan Bean 04:42

Yeah, so the idea of a permit is really simple. Anytime that you want to build something that needs to conform to a city code, you need to submit a permit. So it's just a way for the city to track and make sure that what you're building and what you're doing conforms with electric or building or plumbing or whatever it may be, and oftentimes, so for any new device Wittman, a permit has to be filed has to be on the record so that they can track that and be aware of it. And then anytime you make an alteration within a home, if it does something that say, moves around the alteration of the structure of the building of the foundation, or any type of walls or other work. And so what that means is not only can we track new developments, but also people that are investing a significant amount to redevelop a home. So oftentimes, when you have a neighborhood that maybe it's a little bit older, and the buildings need a little bit of extra love and attention to bring them back to life. That's something that we can also identify within the permit data. So just think of it as anything that when work needs to be done that affects a building a permit probably needs to be filed above a certain dollar amount, or within reason for a new development. That makes

Ariel Herrera 05:45

sense. And in terms of you getting this data from your county, was it already set in an Excel file? Or did you have to wrangle with this data set

Jordan Bean 05:54

at all, this was a great data set. So oftentimes, the bigger the city, the more accessible this data will be. So for example, for the City of Raleigh, all I did was type in City of Raleigh building permits data, and all of a sudden, it takes me to the page and it lets me download that when you get into a program, you can kind of parse out some of those things I said, like only new development, or alterations above a certain amount. And depending on the size of the city, it may or may not be available. Just out of curiosity, I looked at my hometown, in New Hampshire, they don't have that information. But when I lived in Boston, that information is there. So oftentimes, if it is published, it's within a structure that can already be used and mangled pretty easily.

Ariel Herrera 06:35

Perfect, yeah, the better we can have structured data, the more we could use it. So you're able to overlay this on a map. And before we go into what that looked like, could you explain a little bit more of rollin, what is the city template, so there's a downtown and either suburb areas around it fully developed or not as much, I would

Jordan Bean 06:55

say it's more of an emerging area. So for a long time, there's been a lot of investment to go into the downtown to try to get people there, get commercial space there. And now they're really building up the residential aspect of that downtown. And then what happened is, you know, of course, you start to move to some of the outer suburbs. And somewhere like Cary is a city that is directly next to Raleigh, that's more of say, a family friendly place. So higher income, more families, great school system, and then you move north and some of that development starting to ease into that from the downtown. So it's really interesting to see in the data, where there's a concentration of development of the downtown, but really, as you move outside, you start to get to some of those areas that they're more settled, they're more family, but you're still seeing development. Because say, unlike somewhere like Boston, again, comes to mind cuz I live there. There's nowhere to build. There's no room, so everything has to go up. But a city like Raleigh, because it's been up and coming for probably 10 or 20 years now, people continue to find new spaces to develop, and there's still a lot of land to go outside of the core downtown.

Ariel Herrera 07:59

Right? And what were some of these new developments that you saw over the 10 year span, a help for you to gauge what the next possible emerging area is?

Jordan Bean 08:09

Yeah, so I took the data, or I'll give you a little bit of the background on, you know, what actually did with it, but every permit is associated with an address. And then, in order to give some type of structure shape to what that looks like, I've mapped each permit to a census block group. And a census block group is something between 603,000 population that we can pull data on about, say, the demographics or the type of people that live there. So then I wanted to look at, you know, over that time period from for me, you know, after the recession, 2010 to 2021. Within each of those Block Groups, what's the value of the permits that are being filed? And then that allows us to say, Okay, well, in 2010, the downtown was really concentrated. But by 2021, there wasn't a lot of room left, so activity moved south. And so what I did is I looked at for each two year period, so 2010 and 1120 12, and 13, and so forth. What is the movement of how many permits are filed? And what's the value of those permits themselves. And I can look around to myself right now and say, again, that's where a crane is. That's where a crane is, I know what that looks like. But what the data can do is it can tell us, well, actually, it started over here, and then it moved into the next block and then the next block. And as I look at what the data looks like today, compared to say, five or 10 years ago, it's moving south, and that's represented and a lot of the new developments that are coming to market right now we're in the plan. So, for example, again, downtown has been an investment hub for a long time. And now we look at everything that surrounds the downtown, and that's received investment within the last 10 years. All of them are some of the highest developed areas. And now as we continue to move south, that's the area that's starting to rise as we look at the permit value and we look at what's coming to market from a large development standpoint. Right. So things like, you know, the multi use live work, play and tall residential buildings. Those are coming to South Raleigh, it's only a matter of say, probably five years now, you know, permits are already filed and plans are in place. And we can see how some of that more residential development is moving that way.

Ariel Herrera 10:17

Excellent as say someone was looking to possibly invest in the area or just live in Raleigh for lower costs coming from maybe the northeast, would you this data helped to suggest that a good area to invest in with maybe high feature appreciation would be south of Raleigh.

Jordan Bean 10:36

I'm certainly no real estate expert. And I'll give all the caveats that exists there. But I would say that's where developments moving right now. So as we think about where there's a there's a general movement, I would say of people wanting to live within downtown areas. Now that's been dispersed a little bit over the past couple of years with COVID as people look to more space, but it seems like it's centralizing more in that region. We're seeing a lot of commercial development within downtown Raleigh. And so for people like myself around my age that want to be able to walk to work or have a really convenient commute in South Raleigh presents the lowest cost right now relative to the other directions that you could go while still being accessible to a lot of that downtown life. So again, I'm no real estate expert. But I would say that that's the area that based on the permit value, and data tends to suggest that it's moving in the right direction.

Ariel Herrera 11:28

Right. And I kind of took a similar approach, not with permitting, I think that's even better, because you took a data driven approach. But when I was looking for my market, when I came down from the northeast, I looked at several big cities like Austin and Tampa, but ultimately ended up in a surrounding suburb of Tampa, because of future growth, based on like articles that are read on new development. But this helps to actually bring that data driven approach to it, which is super exciting. So if someone wanted to emulate the same steps that you took for their own market, how would we break that down into several simple steps?

Jordan Bean 12:03

Yeah, so the first thing is figure out if the permit data exists. So that's a, you know, whatever that might be that you're looking at, again, if it's above a certain size, say most suburbs or cities, the data is probably going to be there. And then it's figuring out what it has. So every permit is typically associated with a value because they need to pay a fee based on how much the development is going to cost. So if that value field is in there, that's the one that I used. And so it's figuring out, is the data available? And if yes, what information are they giving you within it? Once that comes to be? Again, the way that I approached it is using the Census Block Groups. That's all publicly available information. Depending on whether you're using R or Python, there may be packages that help you programmatically get it. And then again, for me, it was mapping, where is the permit to what is the block group, and then looking at that value over time. So it's just a time series analysis, using block groups using the permit data, figuring out for that market? What makes sense? So I went back to 2010, because I feel there's been a decade long expansion going on within Raleigh. But if it's something that has more time to it, perhaps going back further, or taking a shorter amount of time. So it's figuring out depending on the market, what's the right time horizon, but generally speaking, permits, census block data, bringing them together, and then figure out what that value looks like I use Tableau to visualize that free software for their open source tool, and a really easy way to do it.

Ariel Herrera 13:26

Yeah, Tableau is great. There's so many free resources available. So say if someone who's watching wants to get into data analytics, maybe they've done some of their own projects in the side, but they don't know how to get it out there for others to read. What do you think about using the medium as a platform, and how does someone get started on it?

Jordan Bean 13:44

I think it's a great platform, because anyone can put their thoughts out there and share them, and it provides an audience to be able to do it. So I know that you stumbled across my work on medium and you know, we may not have connected otherwise. So it's a great chance to connect with people that are interested in the same topics. I found that I learned best by doing projects. And so I found questions that were interesting to me, I went ahead and solved them. And then I wrote that up, because I found it helpful to read what other people were doing. And if I go back and read some of my early work, it's still out there, anyone can do it. I've come a long way from where I started to where I am today. And so if there's maybe you're intimidated, because you haven't done it before, or you don't know if it's going to be very good. Well, you can't get better until you start doing it. So I would suggest that anyone that has an interest in sharing their work and using it as a means to learn programming, just start doing it. Find something that's interesting to you do some type of analysis that you find interesting, right up either what you found or how you did it, and then just do it consistently. And over time, you'll find that both your coding skills and your communication skills will probably improve. I

Ariel Herrera 14:47

completely agree. Thanks for that Jordan. And besides being an analytics, writing about some of your topics that you find interesting, what else do you do for fun?

Jordan Bean 14:58

Yeah, I love the outdoors and that's the one of the reasons that I came in to Raleigh is, when you're in the northeast, anyone that lives there probably for six months a year, you have trouble going outside unless you're skiing and snowboarding. So there's a lot of outdoors here. There's a lot of parks, there's hikes, we can get up to the mountains, or over to the beaches. So for me, anything that's outdoors and moving around is probably going to be pretty fun.

Ariel Herrera 15:18

Excellent. And if those wants to reach your follow you your blog or website, how would they be able to do that? Yeah,

Jordan Bean 15:25

LinkedIn is a great way to get in touch with me, as well as my website, Jordan bing.com. Pretty easy to to remember and contact information there or the blog. So yeah, I love connecting with others in the space. So feel free to reach out and an email or LinkedIn me. Great.

Ariel Herrera 15:39

Thank you so much, Jordan. I appreciate it.

Jordan Bean 15:41

Thanks for having me.