We live in the information age. That means more data is readily available at our fingertips than ever before. So why not use it to your advantage?
With the best real estate demographic data, agents can sell homes faster and find ideal listings for their buyer clients. Investors, too, can rely on demographic data to find investment properties and areas with rental potential.
Let’s explore the various types of demographic data you should pay attention to, strategic ways to use it to your advantage, and a few best practices for research.
Table of Contents
Key Takeaways:
- Real estate data, such as ownership information, property type, average income, education level, and more, can help you understand a market's demographic makeup.
- Demographic data can be used to grow your business, such as running comparables, finding listing leads, researching potential investment opportunities, and more.
- Follow best practices whenever dealing with real estate demographic data to avoid making incorrect interpretations, violating Fair Housing guidelines, or making ineffective marketing decisions.
Types of Real Estate Demographic Data
Demographic data is statistical information about people who live in a particular area. The correct data can give you a clear picture of a region, city, or neighborhood’s real estate market and potential.
Here’s a list of some common types of demographic data agents or investors might use in their research:
Ownership info: This reveals who owns or is renting a property. Information can include names, tax mailing addresses, the number of properties owned, years of ownership, or even reasons for selling a property, such as divorce or pre-probate.
Property type: This allows you to view properties based on types, such as single-family homes, multifamily buildings (e.g., duplexes, triplexes, or apartments), townhomes, mobile homes, condos, co-ops, or land.
Average or median income: Knowing the median income of a population can help you understand home pricing and rental rates in a particular area.
Household composition: You can learn the percentage of single-person, family, and multi-family households in an area.
Population data: A population’s growth rate can signal how strong a region’s real estate market is. You can also look at age distribution, which tells you what percentage of the population is within specific age ranges.
Education level: This shows you the percentage of the population that has finished various levels of education. This information can be helpful because it can offer insight into which activities local residents are the most interested in, aiding your marketing efforts.
Commute data: Learning about a region’s average commute times and transportation options can help you understand the market and property values. For example, areas with public transportation tend to have higher population density and home values.
Job market trends: An area’s employment trends can drastically impact its real estate market. Greater employment opportunities can increase population growth, affecting supply and demand.
5 Ways to Use Real Estate Demographic Data
Knowing what data to find and how to use it to your advantage are two different things. Keep reading to learn how to use real estate demographic data strategically as an agent or investor.
1. Run Comparables
Running effective comparables is challenging without the correct data.
When evaluating a home, it’s essential to research other properties of the same type for comparison. Knowing how popular those property types are in the area can help you determine a fair yet competitive asking price. And finding properties that are rented vs. owner-occupied can help you make a more accurate comparison.
If there aren't similar property types in the immediate area, you could also use average income, commute data, and job market information to run comparables.
2. Research Properties
Agents and investors often use demographic data to identify a local market’s trends and growth potential.
For example, if you’re interested in an investment property, you may want to research the area’s population growth and job market. If both are growing, that may signal that demand and property values will keep increasing.
You might also consider the area’s commute times and transportation options when considering a rental property. Knowing an area’s average income and education level can also help determine whether the asking price is fair.
3. Help Buyer Clients Find Properties Based on Preferences
Mining an area’s demographic data can give you insight into whether a buyer client might be interested in a property there.
For example, if your client has young kids, you may look for neighborhoods with more family (or multifamily) households. They may also be interested in areas with more single-family homes or townhomes, as these properties tend to have more yard space for kids to play.
Note: While demographic data can inform your property searches, be careful how you discuss demographic information with clients, especially buyers. To comply with the Fair Housing Act, it’s a good idea to avoid discussing an area’s household composition, education levels, income levels, or any other data that could be construed as discriminatory. Avoid divulging this information in marketing materials as well.
4. Find Listing Leads
Whether you work best with first-time homebuyers, luxury buyers, or investors, researching demographic data is a great way to find your ideal clients.
Ownership information is critical here. Try looking for properties being sold due to divorce or pre-probate. If you see a seller who owns multiple homes, you can ask if they’d like your help selling any other properties.
5. Inform Your Investment Opportunities
Investors often use demographic data—such as job market growth, population growth, income level, and migration patterns—to identify areas with high rental demand. Using ownership info to uncover a region’s renter-to-buyer ratio can also help.
One way to spot growing neighborhoods is to track demographic shifts. For example, if an increasing percentage of the population is getting degrees in higher education, it could be a sign that income levels and property values may soon increase. Likewise, if a large corporation builds a new headquarters nearby, housing demand may soon grow, leading to higher home values.
Best Practices for Using Demographic Data
It’s easy to make mistakes when studying data. Following the best practices below can help you correctly interpret market trends and make more effective marketing decisions.
Stay updated with demographic trends and changes.
Data can change quickly. Keep current on demographic trends by reading local publications and, even more importantly, periodically checking real estate data tools. The sooner you can spot a change, the faster you can respond—potentially leading to better investments or more clients.
Use demographic insights to inform your marketing strategies.
You can tailor your marketing strategies to match the demographic makeup of your local area. For example, if you own a rental condo in a college town, you might cater your marketing efforts to college students.
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