This week is going to be devoted to real estate and more specifically analyzing real estate markets. It is always important to do your due diligence when investing money and real estate is no exception. The idea behind this mini-series is to help people grasp a stronger understanding of what indicators can help predict a markets future. So without further delay here is Part I:

The population of the area: Lets face it, if the population in a region is decreasing chances are, the demand for real estate is going down. If demand goes down so will the price and who wants to invest in a property that will decrease in value (not me!).

It is important to look at not only whether the population is growing or shrinking but also the rate at which it is doing so. To do this you should look at the growth rate for the past 5 years. If the population growth has gone from -1% to 0% to 1% to 3% to 5% over 5 years, it is very likely you will see that the demand for real estate has increased at a similar level.

Here are some important questions to ask when analyzing the population:

• Why are people moving into the region?
• Are people moving in temporarily or are they staying for the long-term?
• How does this city/region compare to other places in the same state and/or country? If the population growth rate is going up, but still slower then the rest of the state it may not be the best investment
• Are there any new developments that will require more people to move to the region? Ex. A new factory is opening and the town doesn’t have enough workers to fill it, this implies people will be moving into the town to take the jobs

To find this information you should try contacting the local government, as they often track this kind of data. Another big source of information is found at the Federal level from the U.S. Census Bureau or Statistics Canada, depending on where the region is.

Part II: Employment Rates >>

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Filed under: Due Diligence, Investments, Real Estate