I’m writing to start a discussion regarding market selection. I know many of us have heard Seth and others discuss what to look for in a market. It seems simply enough: close to a large metro area, rural, maybe some point of interest nearby.
Is there more to it? What are the considerations you prioritize when selecting a market?
I suppose I’ll mention the specific issue I’m wondering about: Market Saturation. I have been reviewing and comparing markets based on how much current inventory is listed for sale compared to historic sales, e.g. how many months of inventory is currently listed. The disparity between markets is crazy. Some places have 3 months of inventory listed, others have 4 years worth of inventory listed. Do you review this criteria, and do you have any rules of thumb in this regard?
@epowell2 - when you say 'months of inventory' - how are you quantifying this? Are you taking the average of every single vacant lot on the market? If so, how are you filtering which listings show up in your search? And which website are you looking at?
In terms of market saturation, this is a bit relative, because it depends what types of properties you're referring to, and how much interest is being shown in each of those properties.
For example - on Zillow, you can see how many views and saves each listing is getting.
For example, if you see that each listing is getting less than a dozen views over the past month, this could be an indication that there aren't many people interested in these properties. If you list a similar property for sale in the same market, there probably won't be many people interest in yours either. However, if you see that the average listing is getting hundreds or thousands of views, then this would tell you that there are a lot of interested parties looking at properties like this.
And of course, job growth, tourism, low unemployment and those other factors are also helpful things that can point you in the right direction.
@epowell2 would love to understand how you pull the data to define and determine "market saturation." if that's something that can be done efficiently and is sustainable, seems logical it would be another useful data point, especially if used to validate other demand research. analysis paralysis can keep us from mailing, so if determining "market saturation" is a sticking point, what's available already works just fine. referring to observing the views and DOM on Zillow, visiting successful land investor disposition websites, and speaking with local experts, like a trusted RE agent. Combining just these three channels is enough to commit to a mail campaign (or not).
Sean and Seth- thanks for the time/reply. To roughly figure market saturation, I took the current for sale listings on Zillow and divided it by the last two year sales/24. This should result in an approximation of how many months of inventory is currently listed.
Seth- thanks for the reminder about checking views/interest in recently listed property. You mentioned this before but I forgot. This seems like a good measure.
I do what Seth does; Check zillow and put in similar properties (land/acreage) then check the views and saves. If there is movement then you can temp the market. You can also check on sold properties in the last 6 months.
I would also check the county website to see how user friendly. I have properties in a couple counties of FL where I never have to call them, EVERYTHING is online, even vesting deed imagery etc.
I am buying in a couple props in counties in West Texas right now that literally want me to mail in a check with paper request to get the vesting deed and GIS mapping.
