A Word about Demographics
The term demographics refers to population characteristics such as the income levels, occupations, education, ages, household size, household composition, and so on. This demographic data can be obtained by real estate investors from the U.S. Bureau of Census and commercial market research firms at www.census.gov.
On a local level, however, and even more important than current neighborhood demographics, real estate investors must learn who is moving into the area. For example, a good sign for investors that there may be appreciation potential is when a historically lower-income area starts attracting middle or upper-middle-income younger residents, or when many residents in the area are moving from welfare to jobs.
How do you learn about an area?
First, get out of your car and talk with residents in the neighborhood. Talk with real estate agents, mortgage loan officers, retail merchants, schoolteachers, and others who might have firsthand knowledge about the area. Ask questions such as, whether they see the area changing, whether these changes are positive or negative, and what they like least and like most about the neighborhood. Then evaluate what you see and hear and form your own conclusions. If researched correctly, real estate investors should be able to form an opinion about the area that helps decide whether the people moving into the neighborhood are likely to push up home prices and rental rates, or causing it to deteriorate.
Author: James Kobzeff, September 29th, 2008
