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Real Estate and Demographic Data
Advice on demographic data
for real estate investments
By David Leonhardt

Demographics and population data influence almost every decision
in modern life, from business planning to healthcare provisions,
from education needs to fashion and style. Age, ethnicity,
gender, income, mobility, employment, geography and other
demographic factors determine the shape of our society.

Real estate is no less affected by the ebbs and flows of
demographic trends, particularly income, aging, family situations
and employment. Consider a real estate broker, whose livelihood
depends on people changing homes. Economic mobility is a key
determinant in the future of his business, as is the economic
health of the region.

"I look to see how fast the economy is growing, and how many jobs
are likely to be created as a result, to determine the resources
my business will need over the next five years," says Terry
Denoux, a Bend, Oregon, real estate broker. ( )

Development planning relies even more on demographic data to
determine priorities. The average age of the population is a
major factor in the type of housing that will be required over
the next couple decades.

"A young population in an area will require more single family
homes with multiple bedrooms and plenty of space for children to
run," explains Wendy Cobrda of Catosphere, a demographic data
reporting company ( ). "On the other
hand, an aging population will need more hospitals, more medical
clinics, more housing that requires minimal maintenance."

For investors, the stakes are just as high. Investing in
commercial real estate, for example requires the ability to
forecast where there will be a growing population, and/or where
the population's average income will be increasing.

In fact, commercial property investment requires a deeper
understanding of demographic data; it is not just the population
trends that need to be considered, but the demographics of the
competition. And even those cannot follow a set formula.

For instance, an entrepreneur looking to set up a new car
dealership needs to consider where established dealerships are
located and set up shop nearby. Car buyers wanting to compare
similar models need to visit several dealerships, so they need to
be close to one another.

On the other hand, an entrepreneur looking to set up a new
hardware store, should look for an area underserved by the
competition or where new residential developments will be opening
up. Hardware shoppers can compare brands of similar tools within
the same store, so ease of access takes on a greater importance.

On the topic of ease-of-access, road traffic patterns can also
make or break an investment, especially near busy intersections
in competitive markets. The demographics of traffic can add to
the complexity of making a commercial real estate investment.

Understanding where to invest in retail properties is one of the
main reasons that demographic mapping is such a popular service,
Wendy Cobrda explains. "To visually see the movement of people
and their spending dollars helps businesses 'see' where they
should open their next store."

Demographic data plays a role in vacation rental real estate,
too. "Do you buy vacation rental properties, or do you sell the
ones you have now?" asks Steve Curtis, owner of a , a website listing vacation rental
properties in Florida. "Well, that depends on how much
disposable income people have for vacations and, more
importantly, on the age of the population. A younger person is
more likely to backpack through Europe, and stay at a hostel. An
older person in more interested in comfort and privacy, which is
what vacation rental properties offer."

It also depends on where populations are growing more, as well as
where the affluence is growing. If an economic boom is happening
in England and France, but not in the USA and Canada, a vacation
rental in Spain might prove more useful than on the Gulf Coast of

"Business planning is just a shot in the dark without solid
market data," explains Ms. Cobrda. "Demographic data reports and
maps help businesses project market activity into the future,
helping to avoid such catastrophes as building stores with no
customers or storing a few million dollars of inventory that
nobody wants."

Given the high stakes of real estate investment, whether in
residential, commercial or vacation rental properties,
demographic data reports and market segmentation data are even
more important.


David Leonhardt is a freelance writer
who also runs a ghost writer service:

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