The U.S. real estate market is incredibly dynamic. From the impact of rising interest rates, sticky wages and employment growth, to disturbances like Hurricanes Harvey and Irma this summer, as well as structural changes in consumer lifestyle, such as the emergence of shared work spaces versus traditional office space, the industry is very sensitive to external forces. Thus, to make strategic decisions of any value, professionals in the field need access to reliable and timely information to make strategic decisions.
Fortunately, tools exist that help both residential and commercial real estate players analyze critical trends. Many of these tools draw from public and private sources that aggregate and anonymize information, creating “big data” sets to help identify market trends in home-building or growth in commercial space demand, on an annualized basis. Yet, the real estate market is not a slow-moving industry, so when this data is delayed or skewed it cannot always indicate what’s really going on behind the scenes for any specific neighborhood – particularly when it comes to identifying “hot spots” generating income and job growth just across town, or those “emerging locations” where new industries foster the migration of people from across the United States.
These very timely and accurate insights can provide real estate professionals with a competitive edge—understanding where income and job growth is happening now. This can lead to discovering what consumers are spending, what types of retailers would flourish in specific locations, and whether an area will experience sustained economic development. By their nature, it will be industry-leading companies that capture this big data on a more timely and accurate basis, and it will be in high demand. This will transform the real estate market by aiding reliable decision-making. With the U.S. real estate market valued at $30 trillion, the stakes are high.
Here are some key areas where timely and accurate big data can make an impact on the real estate industry:
Making near real-time decisions
There’s no denying that having the freshest, most accurate information available gives companies a leg-up when making business decisions. Publicly available data, and even some private data, is updated on an infrequent basis. On the other hand, income based geo-economic data from leading data providers is collected, aggregated, and analyzed on a timely basis, some are updated monthly or even more frequently. By moving towards near real-time data, the industry can leverage more accurate, up-to-date insights and adjust important investment or buying decisions accordingly.
Getting data to tell a story
In real estate, as in many industries, big data is often considered challenging to leverage for someone without a data science background. However, coupling accurate and timely data with unique new interactive mapping tools to compile and present data in a way that tells a story could be a game changer. Has an area that currently appears economically stable actually peaked, making it poised to lose value? Just look on an interactive map. New data visualization tools being introduced into the market make gathering insights as easy as clicking on a zip code for a specific town and coming away with information that can help real estate professionals see trends before they become trends.
Observing data migration
Trying to decide where to start your next single-family home project, or where to open a Michelin 3-star restaurant? Another important facet to utilizing timely and accurate big data is the ability to see, in practically real-time, income and industry migration patterns in the marketplace. This can allow investors to “follow the money” by looking at people, where they work, what they do and how much they earn, all in the context of how they are moving between zip codes, counties, metro areas and states.
In the end, utilizing reliable and timely income data from payroll providers, credit card companies and others to aid in decision making will add depth and transparency to how the real estate market makes decisions. This has benefits for all. The individual residential buyer looking to purchase their first home could face a more level playing field in terms of fair pricing. And commercial players will be able to make smarter, more informed investment decisions.
About the Author
Misha Ghosh, GM & DVP, ADP Ventures, Big Data. Misha is a Senior Executive in ADP’s global strategy organization responsible for the monetization of the enterprise’s big data assets. He is experienced in big data and analytics and focused on delivering data driven insights and strategy. Prior to joining ADP, he was with MasterCard. He was the winner of MasterCard’s 2014 global innovation challenge by leveraging MasterCard’s data assets for the retail commercial real estate industry. Misha also spent eleven years with Bank of America in senior-level capacities within Decisions Sciences and Analytics. He was recognized by Bank of America as the Inventor of the Year for 2008 for his many innovations within the bank. Misha holds a B.S. in applied mathematics and statistics from San Francisco State University, a M.S. in statistics from University of California, Davis and an MBA from University of Phoenix. To date, he has forty-six issued patents and over one hundred U.S and international patent filings pending.
Sign up for the free insideBIGDATA newsletter.
Speak Your Mind