Real Estate and Demographic Data Advice on demographic
data for real estate investments
by David Leonhardt
Published on this site: January 5th, 2006 - See
more articles from this month
Demographics and population data influence almost every decision
in modern life, from business planning to healthcare provisions,
from education needs to fashion and style. Age, ethnicity,
gender, income, mobility, employment, geography and other
demographic factors determine the shape of our society.
Real estate is no less affected by the ebbs and flows of
demographic trends, particularly income, aging, family situations
and employment. Consider a real estate broker, whose livelihood
depends on people changing homes. Economic mobility is a key
determinant in the future of his business, as is the economic
health of the region.
"I look to see how fast the economy is growing, and
how many jobs are likely to be created as a result, to determine
the resources my business will need over the next five years,"
says Terry Denoux, a Bend, Oregon, real estate broker.
http://www.gobend.com
Development planning relies even more on demographic data
to determine priorities. The average age of the population
is a major factor in the type of housing that will be required
over the next couple decades.
"A young population in an area will require more single
family homes with multiple bedrooms and plenty of space for
children to run," explains Wendy Cobrda of Catosphere,
a demographic data reporting company http://www.catosphere.com
"On the other hand, an aging population will need more
hospitals, more medical clinics, more housing that requires
minimal maintenance."
For investors, the stakes are just as high. Investing in
commercial real estate, for example requires the ability to
forecast where there will be a growing population, and/or
where the population's average income will be increasing.
In fact, commercial property investment requires a deeper
understanding of demographic data; it is not just the population
trends that need to be considered, but the demographics of
the competition. And even those cannot follow a set formula.
For instance, an entrepreneur looking to set up a new car
dealership needs to consider where established dealerships
are located and set up shop nearby. Car buyers wanting to
compare similar models need to visit several dealerships,
so they need to be close to one another.
On the other hand, an entrepreneur looking to set up a new
hardware store, should look for an area underserved by the
competition or where new residential developments will be
opening up. Hardware shoppers can compare brands of similar
tools within the same store, so ease of access takes on a
greater importance.
On the topic of ease-of-access, road traffic patterns can
also make or break an investment, especially near busy intersections
in competitive markets. The demographics of traffic can add
to the complexity of making a commercial real estate investment.
Understanding where to invest in retail properties is one
of the main reasons that demographic mapping is such a popular
service, Wendy Cobrda explains. "To visually see the
movement of people and their spending dollars helps businesses
'see' where they should open their next store."
Demographic data plays a role in vacation rental real estate,
too. "Do you buy vacation rental properties, or do you
sell the ones you have now?" asks Steve Curtis, owner
of a http://www.fabvillas.com
, a website listing vacation rental properties in Florida. "Well, that depends on how much
disposable income people have for vacations and, more importantly,
on the age of the population. A younger person is more likely
to backpack through Europe, and stay at a hostel. An older
person in more interested in comfort and privacy, which is
what vacation rental properties offer."
It also depends on where populations are growing more, as
well as where the affluence is growing. If an economic boom
is happening in England and France, but not in the USA and
Canada, a vacation rental in Spain might prove more useful
than on the Gulf Coast of Texas.
"Business planning is just a shot in the dark without
solid market data," explains Ms. Cobrda. "Demographic
data reports and maps help businesses project market activity
into the future, helping to avoid such catastrophes as building
stores with no customers or storing a few million dollars
of inventory that nobody wants."
Given the high stakes of real estate investment, whether
in residential, commercial or vacation rental properties,
demographic data reports and market segmentation data are
even more important.
David Leonhardt is a freelance writer
http://www.seo-writer.net/freelance/writer.html
who also runs a ghost writer service: http://www.seo-writer.net/freelance/ghost-writer.html
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