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Realytics
Your personalized real estate investment tool
DATA IS EVERYWHERE
From GDP Data and Unemployment Rates to Interest Rates and Property Taxes, we have access to data at our fingertips. All of these variables and more interact in complex ways to determine the true price of a real estate asset. Why then are we not harnessing the power of data to make informed decisions in the Real Estate Market?
BUT RIGHT DATA, ISN'T
The challenge comes from having to spend time, money and effort to gather all the required data. Most data that's available from trusted sources are free but not available at the level of granularity we're looking for. Some data requires us to pay for it and we've to often spend considerable amount of time cleaning and gathering the right data.
STRIKING THE RIGHT BALANCE
Because Real Estate investment decisions rank high in risk and reward, balancing the Risk and Reward is very important to maximize your Return on Investment. This can be achieved by drawing insightful information from the data that's out there.
Realytics is a Data Analytics based tool that'll help narrow down your search for the perfect investment opportunity down to a zip code level. We collect data on housing prices, building permits, unemployment data, crime blotter and school ratings to create a personalized index that you can use to determine your ideal region to invest in by weighing these parameters according to your requirements. Once the weights have been set by you, we provide you with an easy to interpret Heat Map of Pittsburgh and also show you the trends in the parameters selected for your top 5 zip codes.
Why should you invest now?
Looking at the Unemployment Rates for all the major Counties around Pittsburgh, we can easily see that the unemployment rates in Allegheny County are very low. This tells us that the economy is doing well and that the people have a lot of purchasing power. This is a good proxy suggesting that the Return on Investments would be high for investments in Allegheny County, whether you are a residential user looking to buy a house to love or sell for profit, a commercial developer trying to build and sell apartment complexes or even a restaurant or small business owner looking to start a shop in a new location.
Data & Methodology
Realytics collects data on Median House Prices for the current month from Zillow, Building Permits for the past 6 months & Crime Blotter data for the past 30 days from Western Pennsylvania Regional Data Center, School Rankings from Niche. All these parameters are scaled using the Min-Max scaling method so that they all range from 0-1. This is done so as to not skew the results in favor of parameters with large values like Building Permit values which go up to hundreds of thousands of dollars. The combined index is calculated as shown below:
The indexes are explained below:
House Price Index- Used to control the weight of median house prices. A higher value would favor a zip code with higher house prices.
Permit Index- Used to control the weight of building permits in a zip code. A higher value would favor a zip code with a higher total value of building permits over the last 6 months.
Negative Crime Index- Used to control the weight of crimes reported in a zip code. A higher value would favor a zip code with a lower crime rate over the last 30 days.
School Index- Used to control the weight of school ratings in a zip code. A higher value would favor a zip code with a higher school rating.
The final calculated value of the Realytics Index shows how much a certain zip code is valued over another. High values of the Realytics Index are shown in red/dark orange colors on the heat map.
Residential User
A potential home buyer/owner might be looking at House prices across all Zipcodes and the Crime rates in the neighbourhood that he’s willing to invest in. A higher price and lower crime rate might indicate a higher growth rate, but he/she/they would be more concerned with house prices than Crime Rates. Usually School Ratings are also important for a residential user and hence the house prices are given a weight of 50%, School Rating a weight of 30% and Crime Rate 20% to come up with the following map.
Commercial Developer
A commercial developer or apartment complex developer might be more interested in the areas that’re booming with a high value of Building Permits as they are an indicator of the economic health of a region. They would also be concerned with the Median House Prices in the region as they won’t be able to sell their office spaces/apartments at a rate way higher than the existing rates in the neighbourhood. Hence the Building Permits and Median House prices are weighted at 55% and 40% respectively along with a 5% weight for Negative Crime Index.
Restaurant/Small Business Owner
A restaurant or small business owner on the other hand would be concerned about all 3 factors. They would want to invest in an area that’s booming(meaning medium to high home prices), easy to obtain permits to operate their business and has a low crime rate so that they get more traffic/customers in their business. Based on these concerns a weight of 30% has been asigned to building permits, 40% to House prices and 30% to the Crime Index as shown below.
All Power to You
All of the graphs shown above are completely under your control. To vary the parameters based on your preferences, just slide the index bars to the right of the heat map and all the visualizations will be updated based on your demand. Another fully adaptive dashboard with all 4 elements - house prices, building permits, crime data and school rating- is shown below. This is in case you're interested in looking at every variable instead of a subset of the variables. The data sources and the Excel sheet where all the features are scaled and the value calculated is also provided in the Bibliography Section for your use.
All in One Dashboard
Bibliography
- Tableau Public Unemployment Rate Visualization
- Tableau Public Residential User Dashboard
- Tableau Public Commercial Developer Dashboard
- Tableau Public Small Business Owner Dashboard
- Tableau Public All in One Dashboard
- Median House Prices from Zillow: Zillow provides the median house prices for a city broken down by zipcode for the current month. This data is available as an API in the following link. I’ve written a Python script that pulls this data into an easy to use Excel sheet that we’ll be using.
Zillow Data - Employment Statistics: The employment statistics for each county in Pittsburgh is pulled from the US Bureau of Labor Statistics. This is a good indicator of the economic development of the region and indirectly determines the rise/fall in housing prices over time. The data is directly available as a CSV download in the link below.
Employment Statistics - Building Permits: Ease of getting permits in a Zip code might incentivize certain developers and commercial users to weigh this data more in their ranking. It also acts as a good proxy for the economic growth of a region and is an indirect indicator of the GDP of the city. The data is publicly available at the below link.
Building Permit Data - Crime Data: Most homeowners would like to invest in a low crime neighborhood. This data will have a high weightage for residential users and small business owners as it determines the potential for further investment and growth of an existing investment. The last 30 days data of the crime blotter that's provided by the Police is available publicly at the following link.
Crime Data - School Ratings: The 2019 School Rankings published by Niche is used to compute the school ratings. Most residential users value this attribute highly while trying to narrow down their search to a zip code. The rankings are extracted from the following link:
School Ratings - An Excel sheet that has combined all the data available from these sources is available below:
Realytics Final Model.xlsx - Photo by Vidar Nordli-Mathisen on Unsplash under an Unsplash licence
- Wordcloud created using WordArt
- Photo by Tierra Mallorca on Unsplash under an Unsplash licence
- Photo by Vidar Nordli-Mathisen on Unsplash under an Unsplash licence
- Visit the Portfolio page for further data visualization projects
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