Market Analysis for Real Estate Appraisers – Part 2
This is part two of a five part series on Market Analysis for Appraisers. A new part will appear each day. In part 1 we talked about the “ who” that should do this. In this segment we’ll discuss “what” types of things that should be done. To read "Looking Back to the Future: Market Analysis for Real Estate Appraisers - Part 1 "click here"
While the demographics of an area (population, employment, households and housing counts) makes the economy move, it’s the relationships between the economic indicators that tell the story. 
Examine demographic and economic data sets from any community and over time, you’ll notice certain patterns or trends. When you chart the data and do some analysis, the picture gets clearer.
The chart below shows the population, employment, existing housing inventory and households for the Las Vegas MSA over the past 15 years.
You can use ratios to determine the relationships of indicators. Note the consistency and trends over time. Since the economic and demographic indicators can be developed using slightly different methodologies, it is important that you understand what comprises their totals.
It is also important to select a reliable source of data source so that in the future, as you add the next year’s numbers or make projections, you will be using indicators that are based on the same methodologies. The US Census, State Demographer or local university will track this type of information for your area.
An issue of concern is “change.” Things are always bumping into the economy and causing unforeseeable economic events (9/11, Katrina, etc.) that impact the numbers and relationships. It doesn’t have to be a disaster; it can also be as a result of economic expansion such as the relocation of a new industry to a community or a shift in the population make-up.
During 1970 - 80 the Las Vegas MSA population to employment ratio dropped from 2.24 to around 2, a result of a large inflow of retirees to the market. The senior % of adult population grew from 12% to 21%, reducing the average family size and the ratio of population to homes.
Similarly, from 2003 - 05 we saw the impact of 40-year low 
interest rates on home sales locally and nationally. Since it’s unlikely that this trend will hold or repeat itself, we need to consider the effect of using ratios developed during those years.
In the next segment, we’ll take a look at economic expansion and multipliers.
To read "Looking Back to the Future: Market Analysis for Real Estate Appraisers - Part 1 "click here"
AUTHOR: Patrick Egger, Stewart Title of Nevada, is a Certified General Appraiser and the creator of several Real Estate CE Classes including "DeMystifying the Appraisal - Appraisal Techniques for Real Estate Agents" and “Understanding the Las Vegas Marketplace” … Market Analysis for Real Estate Professionals” from which this article was excerpted. He also has his own blog - Intouch. Contact: [email protected]
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