Real Estate Markets and U-Haul Migrations: What You Need To Know
Published by Jordan Girard on December 2nd, 2020
When people look at data for real estate, there are often two types of data to analyze. The first data type is raw market data. These are the reports that you see on the news, such as "home prices went up in August", or "homes sit on the market longer". The second type of data for real estate analytics consists of "alternative data". This type is not entirely obvious, but rather, it's the data that isn't straightforward. U-Haul migrations, for example, are alternative data. They tell us something about the market (since people won't rent a one-way U-Haul to a place they're not moving), but they're not as concrete as, say, home sales.
The correlations, causations, and other inferences you can make from these different data sources are robust. It's like putting a puzzle together. You can use these alternative data sources to paint a clearer picture of the market. This type of inference is something that AI does remarkably well.
To understand how we can use these secondary data sources for real estate analytics, let's look at a case study that we developed to answer the simple question: "where are people moving during this pandemic?"
Alternative Data for Real Estate Analytics
During a normal election cycle, one of the fantastic things about real estate analytics is that alternative data sources frequently confirm or reject hypotheses. During this pandemic, we wanted to know where people were moving. With more companies than ever permitting employees to work remotely, it's no secret that people are leaving the high cost of living places and moving to ones that have a lower price. People are moving back near friends and family, as well.
The U-Haul report is an alternative data source that often provides valuable insights into how typical a city is as a final destination. We looked at the data for 2019, the most recent available pre-pandemic. Houston was the top destination, followed by Las Vegas, San Antonio, Chicago, Orlando, and Austin. Phoenix and Miami are also on the list.
We then looked at the Case-Shriller House Price Index for four cities - Phoenix, Las Vegas, Miami, and New York. Prices in all four places were growing before the pandemic, although Miami, Las Vegas, and Phoenix are rising faster than New York. During COVID-19, New York prices begin to fall, while all the other areas continue to increase.
The Rise of the Sunbelt Locations
There has long been a trend in real estate where professionals seek to move away from the higher cost of living places searching for a better quality of life. Brookfield's fantastic report detailed all of this and broke down which states benefit most from this migration (Texas, Nevada, Arizona, South Carolina, and Florida were the big winners).
During the pandemic, what we're seeing is that this trend is accelerating. Looking at the U-Haul and Brookfield data, we see there's a trend towards sunbelt locations. As the Case-Shriller House Price Index shows, Las Vegas, Miami, and Phoenix continue to grow. The only non-sunbelt city, New York, declines. These data correlate with what have seen coming out of the news. Austin is a red hot market, even during the pandemic. New York and San Francisco are facing an uncertain future.
Real Estate Analytics Requires Multiple Data Sources
This small case study shows how real estate analytics pulls in multiple data sources. In doing so, these analytics paint a broader picture of the market. Whiterock's advanced AI-based real estate analytics platform pulls in data sources of this nature, thereby providing deep insights into each real estate market. It truly is like having your team of data scientists and researchers available whenever you want!
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The Sunbelt states received a significant influx of professionals looking for a better quality of life. The coronavirus pandemic has exacerbated that trend as people leave the higher cost of living locations to save money and afford more home. Alternative data and real estate analytics, two things that Whiterock specializes in, give us the complete picture of this migration.