While it is entirely possible for a seasoned real estate investor to rely heavily on instinct, one’s intuition can only take them so far in this industry before they must transition to tangible real estate data. If for nothing else, the numbers are the only thing that will matter when it comes time to make a move in an industry such as this. Those who understand and interpret real estate data will have a distinct advantage over the competition, and there is no reason you can’t be on the winning side.
It is not a coincidence that today’s most prominent real estate investors rely on real estate data to make some of their most difficult decisions; nothing will provide more of an objective answer than the numbers and what they can tell real estate investors. It is important to note, however, that real estate data can, will and already has transcended monetary valuations. Big data is no longer relegated solely to the profit on a deal, but rather everything. Information is invaluable, and real estate data is now a vital asset to investors of every level.
That said, big data represents a collection of information that can be further analyzed and used to identify trends. Facts and figures from nearly every aspect of every industry can be compiled in a way that benefits those that know how to read it. And if real estate investors listen closely, they will gain access to some of the most valuable information the real estate world has to offer.
The benefits of today’s widely available data are only compounded by the alternative: ignoring it. At the very least, those who use data will have a significant advantage over those that don’t. Nevertheless, the phrase “significant advantage” isn’t representative of how advantageous using today’s data can be, but rather an enormous understatement. I don’t think I am going too far in saying that data is the single most important component of a real estate transaction — outside of the human element that is. Without data, there is no way to properly analyze a deal, buy a property at a fair price, or even judge a respective market’s viability. Data, for what it’s worth, is everything; the end-all be-all of real estate investing. Those that ignore it will no doubt find investing in real estate to be very difficult.
Big data has transformed the way every business conducts daily operations, and the real estate industry is no exception. Collecting, analyzing and translating data has opened up a whole new world of possibilities that know what to do with it. In a sense, real estate data has changed the way investors approach their field. So much so, that real estate investing looks radically different today than it did just 10 years ago.
The best investors have proven capable of interpreting real estate data and using it to their advantage. In fact, those that are paying close attention to today’s real estate data will notice that the numbers are suggesting something we should all be listening to. If for nothing else, real estate data has hinted at a strong seller’s market.
In a Redfin “survey of home sellers conducted this month, 52 percent think now is a good time to sell in their neighborhood.” At that rate, which marks a significant improvement over last year’s 34 percent, it’s safe to say sentiment in the market is growing more positive for sellers. Due largely, in part, to increases in home values, owners can’t afford to sit on the fence any longer; they are no more inclined to sell sooner rather than later. Today’s numbers are too good to ignore, and homeowners are more than likely ready to strike while the iron is hot. But what does that mean for the real estate industry as a whole?
For far too long, sellers have been holding on to their property for fear of joining the buyer’s market. For what it’s worth, today’s market is very competitive and expensive, so homeowners have been scared to sell. However, this news of sentiment improving means that more will look to sell in the near future. An increase of new homes on the market could have a very beneficial impact on the housing market moving forward. At the very least, new listings should alleviate the inventory burden we have been forced to endure for far too long. It should go without saying, but new inventory will make it easier for buyers to find homes, potentially marking an end to the inventory crunch that has allowed prices to increase so dramatically.
And all of this because homeowners feel that now is a good time to sell. The power of real estate data is truly impressive. If you can come to such a conclusion from simply looking at a few numbers, imagine what you can do with all of the data made available to real estate investors on a daily basis.
Real estate data has the power to make a good investor a great one. It is important to note, however, that simply looking at the numbers will only take you so far; you need to be able to interpret them in a way that will identify trends. What have you noticed in your market that you can glean some more information from?