Data granularity has long been a thorn in the side of analysts, whether tracking marketplaces or aircraft. How fine-grained the reporting is, both in terms of frequency and detail, makes all the difference regardless of how you define your battlefield.
REPORT FREQUENCY
In a rapidly fluctuating market, it is critical to have real-time data if you are making real-time decisions. Since the real estate bubble and subsequent burst, appraisers have changed their market look-back for sales comparables from six months to three months, and recently, to a one-month preference, if possible. Temporal similarity has become as important as similarity among other characteristics.
FinestExpert.com addresses this challenge by gathering and analyzing data 24/7 as soon as it is published. Over 10,000,000 listings are processed monthly with a coverage of over 98% of the entire United States. This fine-grained constant updating provides several advantages over the more coarse-grained monthly and quarterly reporting performed by some organizations.
The most significant problem with monthly and quarterly reporting, common to organizations like HUD or the Federal Reserve Board, is that on top of the underlying reporting period, there is typically an additional delay in the reporting of the results. For monthly reports, this is typically ten days to three weeks. For quarterly reports, this is frequently one to three months (and frequently longer). Hence, by the time the report is produced, the market may have dramatically changed, having from two to six months in which to have changed directions.
With FinestExpert.com’s continuous integration of new data, the actual market behavior is always up-to-date and the market trends more readily evident as they are occurring. Today’s rents are known today.
REPORT DETAIL
Although market behavior does not intentionally attempt to hide information (as a pair of aircraft in formation), fine granularity in reporting detail is critical to making intelligent decisions. A metropolitan statistical area (MSA) may cover hundreds of zipcodes and neighborhoods. To make a statement at this level is marginally appropriate when reporting to the national media, but to perform actual work and/or make investment decisions, a finer level of granularity is required because different neighborhoods react differently to the same market stimulus.
For example, a blue-collar neighborhood is typically more subject to unemployment changes than a white-collar neighborhood. Foreclosures first ran rampant through the sub-prime and lower-end neighborhoods and are only now starting to take a more evenly distributed toll. It is expected that the lower-end neighborhoods will soon stabilize, while the higher-end areas will be more subject to loan resets and foreclosures.
Consequently, it is necessary to have fine-grained detail, up to the level of available data. FinestExpert tracks data down to the census tract. When enough data exists, trends are able to be reported at this level. Sometimes, the next higher level of information must be used in order to have enough data samples.
Once the physical neighborhoods are discovered, data next varies by the home characteristics. First there is the breakdown by whether it is a detached home or an attached condo or townhome as these property types command different rents and prices. The next most meaningful breakdown has been found to separate properties based on the number of bedrooms, e.g., two-bedroom versus three-bedroom, etc. Again, FinestExpert tracks data at this level because there are significant differences (not always, but often enough).
DYNAMIC REPORT ANALYSIS
Prior existing systems for aggregating and analyzing properties took a static approach to analysis, reporting data at a coarse-grained level of MSA (or zipcode at best). Finest Expert uses sophisticated algorithms and databases to make the information dynamic and provide the finest possible granularity. Rent (or price) estimates can be calculated for any specific address.
The algorithms go beyond the traditional radius search to actually match like-kind neighborhoods. A unique dynamic between physical and temporal distance are negotiated to determine the most meaningful comps. Then property characteristics are analyzed to determine the best rent (or price) estimate.
Data gathering effort and computational processing power are no longer limiting factors to accurate reporting. Periodic reporting models fail to adequately serve the real-time and fine-grained data needs of the modern analyst. FinestExpert.com gathers and analyzes data on a continuous basis so as to address the needs of real estate investors in today’s rapidly fluctuating real estate markets
