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To Figure Out Where Real Estate Is Headed, Start Driving
Christopher Power / Bloomberg/Businessweek / August 05, 2013
Metrostudy, a real estate consulting firm based in Houston, analyzes the health of the residential market in metropolitan areas across the U.S. and issued prescient warnings about the coming housing bust as early as 2004. One of its main analytical tools is what makes Metrostudy interesting: drive-bys.
Employees drive through newly built—or still being built—home developments and start observing. Are there toys on a house’s lawn? Good sign: A family has moved in. Families mean stability. Is there a garden hose attached to the side of the house? Another good sign. The house is not only occupied, it has an owner who cares about his or her property. A welcome mat is always, well, welcome.
A bad sign: no curtains in the windows. That means the house could be unoccupied—and unsold. Two others that trigger alarms are a high number of empty lots and newly completed but clearly empty houses, both indicators a developer may have badly overestimated demand and could soon be choking on inventory.