Real estate research might start with a look at the U.S. Census information about a town. It can include inspections of specific properties, too. There are many statical tools and information that can help, but don’t forget one of the easiest and most useful research tools: talking. Let me explain with a true story.

My wife and I were on vacation, and stopped in Farmington, New Mexico for a few days. We were about to buy a house for a winter project. The plan was to fix it up and sell it in the spring for a profit.

Just prior to making an offer, we took a last walk-through. As the owner showed me around, my wife started to talk to the woman who was renting the home. She told Ana that half of the outlets in the home didn’t work, as well as other useful information.

This got me thinking, and I went down to the basement for a second look at the wiring. Not only did the house likely need all new wiring, but I found a garden hose attached to a natural gas line. The owner shrugged and said, “You can just cut that off.”

To this day, I don’t know what that was about, but for these and other reasons, we didn’t buy the house. It helps to talk to anyone you can when looking at a house or other real estate investment. Neighbors and renters are especially helpful.

Real Estate Research - Choosing a City

Talking to a lot of people isn’t just useful for information on individual properties. It is also a great way to research a town. I once called the  Chamber of Commerce of Deming, New Mexico. The chairman’s casually commented that the city was using up the water faster than the aquifer was being replenished. They had no back-up plan. This was enough for us to cross Deming off our list.

If you want to know about a town, use the phone first. Find any excuse to call anyone from a real estate agent to a random resident. Ask about crime, whether the local government welcomes new businesses, what the climate is like. Have houses been sitting for sale for a long time, or do they go fast? What are the good and bad things about the town?

Before we moved to Tucson, Arizona, part of our real estate research was to call people in potential towns to see if they owned a snow shovel. If so, we crossed the town off the list. Two places can both get 45 inches of snow per year, but in some it stays all winter, and in others it melts before noon. The snow shovel question told us the truth behind the statistics.

Once you’re in a town, a good local bar can be a great place to do your research. After a beer, patrons will tell you what big employers are about to move in or out of the town, how fast homes are selling, whether there are gangs, and much more. Talking to people is a good way to do real estate research, but verify what you hear. People do sometimes exaggerate.

Three months ago, the “Current Market Conditions” survey showed that overall the U.S. housing market was displaying a rare balance between buyer demand and seller supply for the first time in eight years. The latest quarterly survey shows that equilibrium has been achieved –  41% of real estate agents said more buyers than sellers; 40% said there were more sellers than buyers, and 19% reported a 50-50 balance.
Most notable exceptions are in the Northeast, Chicago metro area, and in the Western states. (See Second Quarter chart.) Home buyers outnumber sellers by considerable margins in Chicago and the West, while sellers outnumber buyers in the Northeast.
Additional proof of a balanced nationwide housing market between buyers and sellers was reported by the National Association of Realtors, which estimated a 6.5 month supply of unsold homes in its May report. An inventory  supply of  5.5 to 6.0 months is considered balanced.
The second quarter national survey also found:

•    Fifty-six percent of real estate agents said it is now on average, taking more than 60 days from listing to contract to sell a house. This is up from 55% in the first quarter and 35% a year ago.  Twenty- eight percent said it is taking more than 90 days to contract.  Only 15% of existing homes for sale are selling in 30 days or less.

•    Housing inventories are continuing to increase:  86% now report a good supply of homes in virtually all price ranges. This is up from 81% in the first quarter and  38% a year ago.
•    Sixty-six percent of member agents reported that annual home price appreciation is now five percent or less. This is down from 8-10% a year ago. Home price appreciation of more than 10% is now 16%, on average.

•    The percentage of home sellers getting 95% or more of asking prices  is currently 68%, compared to 90% a year ago. Three months ago it was 75%.

•    Multiple offers from home buyers are also down substantially. Currently,  the estimate is 32%.  It was  39% in the first quarter and 70% a year ago.

•    First-time buyers still account for one of three homes for sale nationally. Repeat and move-up buyers are most active in higher priced real estate markets.   Recent home price appreciation and rising mortgage rates & interest rates have had only a minimal negative effect on first-time buyers, on average. Exceptions are marginal qualifiers.

“We welcome a balanced, more orderly marketplace for both the consumer and real estate professionals,” said Michael Bearden, president and CEO of HouseHunt, Inc. “Double-digit price appreciation is simply not sustainable for a multi-year period and will eventually drive away entry level buyers.“

Second Quarter Current Market Conditions Survey:   Regional Results

U.S.   South  Midwest    Northeast    West     California*     Chicago*

More Buyers
41%    40%     49%         30%          47%       39%              50%
More Sellers
40%    44%     30%         50%          34%       41%              19%

50-50
19%    16%     21%         20%           19%        20%            31%

Time on Market:

0-60 days
44%   35%     31%         48%           49%        49%              35%

More than 60 days
56%    65%     69%         51%           51%        51%              65%

Sale vs. Ask Price:

90-95%
35%    35%     29%         37%           26%        29%              34%

95% -100% Plus
65%    65%     71%         63%          74%        71%              66%

Annual Apprec.:

5% or less
66%     57%     70%           73%           65%         75%              61%

5-10%
18%    30%       20%           19%         15%          11%              31%

More than 10%
16%    13%       10%             8%           20%           14%                8%

Inventory:

Good Supply
86%     86%     90%            96%          83%           90%               92%

Limited Supply
14%     14%     10%              4%         17%           10%                8%

Multiple offers:

Yes
32%     35%     33%              34%      32%          18%               55%

No
68%      65%     67%             66%           68%          82%               45%

Activity:

First Time Buyers
33%     34%      41%             47%       42%           44%               35%

Move-Up & Repeat
67%    66%      59%            53%          58%           56%                65%

*California survey percentages are included in both U.S. and West  results.
**Chicago Metro survey percentages are included in both .U.S. and Midwest results.