Real estate can be a numbers game, whether you are setting a listing price, making a purchase offer, choosing a mortgage product and down payment, locking in an interest rate, or negotiating the cost of a real estate agent’s services.
And there is no shortage of numbers. Trade groups, agents, bloggers and online communities, brokerage companies, media, institutes, economists and Web sites are among the sources of real estate statistics and information that generate reports, commentary, charts, graphs and maps about the state of the real estate market for a given area. In this era of electronic information and Internet innovation, consumers have more real estate information at their fingertips than ever before.
The real estate obsession that swept the nation during the latest housing boom inspired some creative new ways to gather and display real estate statistics: heat maps, bubble maps, and a wave of new indices (including a “Zindex”) and online tools. While industry statistics have traditionally lagged behind present-day market conditions, Internet-savvy companies are finding new ways to generate real-time snapshots of market conditions.
So many data sources can be overwhelming, though, said Debbie Ferrari, a Realtor in Orange County, Calif. “It’s really an ironic problem — there’s more data out there to study but how do we know which study to study? It is getting harder to get pure data based on real research because now almost every grown-up blog and Realtor Web site has some statistics on it,” she said, adding that many sites carry outdated statistics.
In the past there were fewer sources for real estate research reports, she said, but when you searched for them you would find “just what you wanted. Now, you get a mixture of pure and not-so-pure data being reported.” Ferrari said she recommends that consumers seek out independent studies of the real estate industry that relate to a local market area.
“Studies of a local real estate market by most respected universities tend to be valid. So do local-area studies done by (companies) in the data-gathering business, especially when they quote their study methodology,” she said. Also, it may benefit consumers to monitor multiple sources to determine which sources have the best information for a given area, she said. “Being cynical here is a good idea.”
(See Inman News blog: “Stats, lies and real estate.”)
The National Association of Realtors and its counterpart state and local Realtor groups are a major source of real estate statistics, as the trade groups have access to a wealth of property information collected by its members through associated multiple listing services. NAR’s stats are used by the Federal Reserve, the U.S. Housing and Urban Development Department, Chicago Board of Options Exchange, and many economists. “Our data are also remarkably accurate and we work hard to make them so,” said Steve Cook, an association spokesman.
A potential problem with sources of real estate statistics is the accompanying analysis, said Jonathan Miller, president and CEO for Miller Samuel Inc., a real estate appraisal and consulting company that prepares real estate market reports.
“My pet peeve is ‘spin.’ The biggest problem with information available to the real estate professional today is not the data itself, it’s the interpretation,” Miller said. “If a real estate professional senses spin in something they are reading then the consumer will too. The consumer wants real information, not hyperbole. They want the straight story and then they will figure it out on their own.”
He said it’s best to be cautious about any source of real estate information “that is generated by a trade group or is produced by a firm with something to sell. It doesn’t mean it’s not usable, just be wary. Because something is printed on paper or on a Web site doesn’t mean it’s reliable. I am amazed at how much the consumer takes the words of others at face value.”
As for the growing volume of real estate statistics, Miller said that the key is to find some trusted sources of data and “filter out everything else except for new sources or analysis entering the mainstream and off the beaten track. New information will never stop coming to your doorstep — the problem is 90 percent of it is useless or misleading.”
Miller said the most popular reports his company produces are for Prudential Douglas Elliman, a major New York City brokerage firm, and the target audience for his company’s reports includes consumers, clients, government, peers and media. Miller said that portions of the data that he reports are not available in the public domain.
Daniel Baum, president of New York-based The Real Estate Group NY, a brokerage firm that specializes in the city’s rental market, noted that Manhattan is an island in more ways than one, as the rental market is fragmented and lacks transparency. Data that is released to consumers about the rental market is typically representative of a cross-section of the market, such as luxury high-rise rentals, he said, which can skew the statistics.
“It always made people feel like there was less inventory than there (actually) was — at the end of the day it’s really not helping the general public at all,” Baum said. His company assembled a database of about 3,000 rental properties and combined that with statistics for a roughly equivalent group of rental properties to produce a monthly Manhattan Rental Market Report on average rental prices. The first version of this report launched in January.
The report gathers information for 14 different neighborhoods in Manhattan, and Baum said, “I do try very hard to make sure the data I’m providing is substantial and quantifiable,” adding, “I’m very much forthcoming when we don’t have data.”
Consumers, he said, should take all of the real estate data “with a grain of salt,” and he encourages them to “read the fine print — they have to understand where this data comes from.”
An emerging trend is the creation of interactive data-visualization tools at real estate-related Web sites. Sites such as HotPads.com, Neighboroo.com, PropertyShark.com, Trulia.com and Zillow.com offer new ways to view real estate information.
Property-search portal Trulia.com, for example, this month announced the launch of new real estate mashup sites in conjunction with the public release of programming tools that are intended to spur the creation of other mashups that use the company’s data. Truliaholic.com allows users to compare the volume of search traffic and average listing price information for two county and city areas across the nation. And another Trulia-generated mashup, plotornot.com allows users to compare a variety of statistical sources for a given area, such a traffic, crime, rainfall and demographic statistics to median listing price statistics.
The company also produces heat maps that reflect price differences, and publishes monthly real estate trend reports.
“The feedback we’ve heard is that consumers like that we provide data. There are mountains and mountains of data behind Trulia’s screen,” said Heather Mirjahangir Fernandez, Trulia’s director of marketing. “What we try to do is simplify it. It’s very hard to satiate the appetite both by consumers and the real estate community (for information).”
The company’s reporting is limited to the data available at the site — Fernandez said the Web site passed the 1 million-listings mark in November. “That data continues to get more representative of the nation as a whole,” she said, as the listing database grows.
“The thing that has certainly been proven over the past year is that data can be fun — it doesn’t have to be serious. And people can be entertained by data,” said Amy Botuhinsky, a spokeswoman for home-valuation and property marketing site Zillow.com. The company, like Trulia, offers heat maps that color-code map areas based on price trends. An area with high listing prices would show up as red, for example, while the lowest-price areas show up as green and blue.
Zillow also offers quarterly “Zindex” reports that are based on the estimated value of all homes for a range of markets across the country — including homes that aren’t for sale. The value is based on the company’s algorithms.
More information is better, said Botuhinsky. “The more data you have, the more information you can build on to make more educated decisions and to become smarter about the process. Different data sources are all useful in different ways.” She said that Zillow initially offered some analysis in reporting the data it released but lately has left it up to users to crunch the hard data on their own. “That was a little more in line with who Zillow is: a source of data to help people become smarter, but acknowledging that the real experts are hyperlocal,” she said.
“It makes sense,” she said, that consumers are hungry for real estate data. “Real estate is the backbone of Americans’ lives,” she said, and there is an attraction from both an emotional and a data perspective.
Ryan Slack, CEO for real estate information company PropertyShark, noted that real estate statistics that show extremes are particularly popular. The company’s Web site shows areas that are experiencing price depreciation (the site features a “Double Bubble Trouble” map) and super-heated markets, for example. “Neighborhood-specific sales trends are also of obvious interest. Distress property reports are a hot area right now.” And site users can generate their own customized reports for a given area based on selected criteria such as “all vacant lots in Brooklyn” or a list of owners who bought over two years ago, for example.
The company produces quarterly foreclosures reports, mashup maps down to the parcel level with information such as recent sales and zoning types, and housing-stock analyses for cities and neighborhoods.
PropertyShark is an unbiased third-party data resource for the industry, Slack said, “so none of our statistics or data are tweaked to build a particular market perception.”
He added, “There is a revolution going on with the availability and transparency of real estate information, and our audience is no longer dependent solely on silos of information tightly held by government agencies or individual companies.”
His advice for consumers and real estate professionals who are navigating the ocean of real estate information: “The old saying, ‘Consider the source,’ comes to mind. The user should try to understand if it is in the interest of the information provider to tell a certain story or spin the numbers in a certain direction.”