06-24-22 Tech in Real Estate News | Factors that Influence a Market

Today we're going to discuss three topics, external market analysis for real estate. Second, Tampa Bay has been one of the most impacted housing markets from the pandemic and what factors contributed to that. And third, three states that have the hottest real estate markets right now.

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Welcome to the tech and real estate podcast where we get to dive deep on recent trends in real estate and technology. I'm your host, Ariel Herrera, your fellow data scientists from the analytics aerial channel. And today we're going to discuss three topics, external market analysis for real estate. Second, Tampa Bay has been one of the most impacted housing markets from the pandemic and what factors contributed to that. And third, three states that have the hottest real estate markets right now in some limitations that I found in their analysis. This is going to give you a great overview of different things to look into when analyzing a real estate market. And I'll be adding in some tips of where to find the data as well. And stay tuned to the very end so that you'll get a preview of what's coming for next week. All right, let's get started. For the first article, it was about external market analysis for real estate. So some of you that are in business may already have have heard of PEST analysis. Well, PEST analysis looks into external factors that can directly affect the market. And these are split into four factors. We're going to go through each of these and see how we could use PEST analysis to analyze a real estate market. So first, P is for political, these are influences that are related to politics, politicians and the government. Why would we care about politics when we're investing in real estate? Well, it's very critical because in real estate, there are laws, taxes, inflation rates, that can all be different based upon some rules by housing. So for example, New Jersey that the state I used to live in was a very expensive market taxes were practically double them for the same property that would be getting for the same price in Florida. This constitutes a having higher yearly costs in general, and I also got taxed a lot more within my salary. So just by moving down to Florida, I had an instant increase within my earnings, about 10%, almost getting a 10% Raise, that makes a big difference for a lot of renters as well. So you want to look at states that are landlord friendly. So they don't allow squatters to sit for, say 90 plus days. And also states that are particularly less costly as more people may be flocking to those areas. And that's typically known in the US as the Sunbelt area. So that also includes Texas, Arizona, Florida and other states towards the south of the US. Second, E is for economic factors. This looks into unemployment rates, economic growth, and interest rates as well. So say if you're looking to invest within a neighborhood that's close to you, but you're not sure which neighborhood in particular, where you want to make sure that your tenants are going to have stable jobs, it's important that there's a variety of employers in the area, and the unemployment rates are relatively low. You also want to see unemployment rates on a lower trend, then starting to see it climb year over year, this could signal that a lot of employers are actually leaving the area. And a good resource to see this information is Fred data, which I have a video previously on obtaining data through Python as well as creating a dashboard off of it. The third and pass is social, cultural and demographic changes affect who, when and how people can buy properties. circumstances such as population growth, demographics and environmental factors affect prices for buying property, as well. It affects what tenants want to live within the given area for the area that you're investing in, you want to see the population is increasing the people continuously want to live there, maybe more new employers are coming in, leading to more job opportunities, and overall influx of more families, individuals, or whomever, when you're renting out a property you want to be able to select from the best tenant pool possible. If you only have say, two tenants that apply for your rental over a two week timeframe. What are you going to do? Maybe their credit scores are really low? Are you going to bend over and still accept them

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with knowing some of the risks that I may have of not getting your payments on time? And ultimately having some at the squat in your house? Or will you lower your prices? These are all things to consider. But if you have an area with population growth, and a high number of potential tenants, you'll likely get a lot more people who are applying for your property and have a better selection to choose from which leads to lower risk. I do like the call here of demographic changes. So a lot of baby boomers currently are looking to move and possibly downsize as well. You could potentially just look for a neighborhood of where baby boomers are going. And likely a lot of them have some stable income whether it came from Social Security from their roots Hiram unpackage, and they can be great hands stay for a very long time. It's very costly and enduring to be able to move as someone who is elderly. The last factor for pass is technology factors. That type of technology affects how people book and rent properties online also included our kind of material and method of building homes and undeveloped areas. So you want to understand is the area that you're in? Are they so currently pushing towards having a lot of ad use additional dwelling units to circumvent for the limited affordable housing is going on in the area? As well, you want to understand are people using this area also short term rentals? And lastly, how are people actually booking or trying to apply for a rental property? Are they still using for sale by owner signs or are a lot of landlords using Craigslist, Facebook or Zillow in order to automate more of this process

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and go to a larger tenant pool, you want to understand these things ahead of time, overall pass is a great way to least get started to start thinking about whether a market is favorable or not, and being able to compare different markets to one another as an investor. For our second article, it was really towards one of the hottest markets, which happens to be the market that I live in, which is Tampa Bay. And this article was written by Yahoo. They say that Tampa Bay was one of the most impacted housing markets from the pandemic. And it's up this focus on Tampa Bay, they go over different markets as well and what the factors that made it the most impacted. So overall, the pandemic made it increasingly difficult for homebuyers to get in the market. And those cities being most impacted were Austin, Las Vegas and Tampa Bay. There's very high demand of people coming from other cities, other states to the cities causing very high demand, and thus low housing inventory. A lot of these areas, particularly Tampa Bay that I'm aware of, does have a lot of new development. But there are long waiting lists of six months or even more in order to get a new build. So even though more housing was coming, it still was not enough and Yahoo use the s&p CoreLogic Case Shiller Index in order to identify a Tampa Bay was the fastest rising home prices in the US. So that's a really good index and data points to look at that you may want to bring into your own analysis, the average number of homes available each month and Tampa Bay market dropped 75% While prices were soaring 28% over the course of the pandemic, and I'm a firsthand witness to that when I first moved in June of 2020. to Tampa, I was able to get a three bed two bath with an extra flex room for 270,000. The house now goes for 425,000, which makes it a lot less affordable for those looking to move down and save on costs. But you might be thinking so all of these hot markets that really heated up to us to the COVID. Do we expect to see a boomerang effect and possibly prices drop just back to the normal levels? Well, not really, because if you think about it, demand is still present. And it's not just because people want it to move down for a sunny state. But particularly for Tampa and Austin, they're becoming very big tech market. So a lot of employers are coming into those markets, and they're favorable for landlords as well as lower taxes. So I expect here this will be a high demand for these areas. But appreciation just cannot keep going as high as it has been over the last two years. So should only steadily increase maybe hover around 3%, which is the normal year over year. The part to be definitely aware of for any market is that it is becoming increasingly more difficult for a renter to afford their own home. So particularly for the Tampa Bay market and average homebuyer, it would take about eight years to save enough money for a 20% down payment. And that was an analysis done by a local bank, they looked at the median household income and how much it would take to save now their prices have risen. It could take about a decade, an extra two years in order to afford a similar property. This analysis there was a little bit fuzzy because you have to include appreciation as well as possible income rising inflation, a lot of other factors. But I thought overall, it was really interesting to see how they detailed some of the hottest markets, as well as the Case Shiller Index and how we're likely to see more people as tenants coming down to the area because it is getting less affordable to buy. For the third article. It detailed three states that have the hottest real estate markets now. And this was by realtor.com. Typically I do not look at Top 10 Top 20 cities that are more buyer focus or agent focus, but I did find this interesting wanting to make a call out how the data was used and could be improved upon. So in this analysis realtor says that there are three other states with hot markets and these include Indiana, New Hampshire and Connecticut. So not everyone is flocking to the sunbelt states. But some of the most surprising hot markets are in the northeast and just northern states in general. For example, in Indiana, Elkhart, Lafayette and Fort Wayne make up three of the four cheapest markets in this ranking, all have average home prices below 300k. This makes it affordable for buyers to get their first home, as well for investors to possibly get their first property as well, realtor details all 20 of the hottest housing markets in May. And what they use for their rankings are only three different features. So they look at hotness rank year over year. And the other two factors are median days on market and median listing price. Now, although median days on market gives us the observation of inventory versus demand, and how fast properties are going off the market, it doesn't really detail to us what types of properties are the single family homes? Who are the buyers? Are these big hedge funds that are taking up all the properties? Or is it first time homebuyers as well, median listing price is a good indicator, but we'd like to see what median listing price is looking like year over year as well as how many price drops Have there been is the market starting to call off is it's still heating up with most things. Most houses going over asking or what the contingencies are. There's just so many factors that just to say these are the top five housing markets and may is a little bit unclear. And I'm hoping that I missed something that realtor.com did have that their analysis I did not put in the article. But overall, I think these are good metrics to look at which you could also find typically on Fred Redfin, Stata, and realtor, I believe has this information too, that you could pull directly from Fred. But it should also be incorporated with other different factors when you're analyzing the hottest housing market for a given time period, which we'll detail a little bit more in some future videos, as we'll go over a cheat sheet of how to look at real estate data that impacts the market. So upcoming content coming out next week is short term analysis of short term data rental analysis, which I haven't actually touched as of yet. But I was considering and selling considering putting my current home as an Airbnb. And so I wanted to get some data and decided to use Siesta Key, which is a vacation spot I typically take with family to be able to extract short term market data from Airbnb using apify. So a web bot that's already been trained to do so and then analyzing this data with Python. So I'm super excited to be releasing that next week. And if you want to see more short term data, and please leave comments below, so I can look at other types of resources that can be used for analysis. And lastly, for weekend plans. So on the one end, I've been trying to get into wholesaling. And it's been a bit difficult in terms of finding the time to make these wholesaling calls, because a find motivated sellers, maybe they're going through a divorce, pre foreclosure tax lien, and being able to be their point of contact, to possibly sell their property. And I'm going to be training someone else to help me in this process, so that I can get higher call volume, and hopefully my first deal pretty soon, then on the second and I did touch on this briefly, but I will be creating a real estate market analysis data source cheat sheet. So what this is, you

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might be wondering what market should you be investing in? What neighborhood what zip code, and the information of what to look at is out there, but it's not actually consolidated, where you could see, okay, I need to look at unemployment, unemployment can be found on fraud data source, I need to look at median household income. This can be found on XYZ data source. There's nothing out there that clearly spells it. But I will be creating a way for us to have this all captured on one spot, and then a series of videos that will show how to extract the data programmatically so that you could look at say all the zip codes within a county or a state or whatever area you're focused. And thanks so much for watching. And if you haven't already, please make sure you join the Facebook group so that you can get some of the latest news as well and join in on the conversation. Thanks so much and see you next week.