Population is an aggregate number. Data mining within populations points us towards finding yield. Multifamily demographics is the study of populations within certain boundaries. Sometimes these boundaries are Metropolitan Statistical Areas (big cities), other times they are as small as a city block.
Finding yield begins with having a good multifamily product and is enhanced by knowing the motivations of your customers.
What we do in multifamily demographic analysis is break large pieces of information into smaller pieces of information specific to a place. Why? Because that’s where the money is.
To study a “population” at the sub-market level is the very essence of the matter to understand underlying motivations that drive a particular group of people to live the lifestyle derived within the borders of a place. (Ah. Pausing to relish in the English language for a moment- back to reality).
More plainly: why is it that this group of people are willing to pay this amount of rent to live here? The ultimate “so what” question. What makes you so special (South Beach, Tribeca, Sunset Blvd) that people are willing to pay more to live at an address rather than at another similar address for less money?
Is it lifestyle, prestige, snobbishness, a sense of safety? One reason is self-imposed segregation. I am not referring to racial segregation, but economic segregation. People tend to live in neighborhoods with other people of a similar economic strata. This transcends race, professions, religion and sometimes politics.
A population is the total number of persons inhabiting a country, city, district or area. The body of inhabitants of a place.
Knowing the population of a place represents a single data point that tells us very little. We learn if a place is big or small (relatively speaking). Looking at a trend-line of population speaks to the level of growth occurring over time. Also, nice to know but not enough to draw many conclusions.
What are the differentiating data points drawing a cohort with X income to a location? What motives our customers? What future occurrences will enhance or detract from a particular group living in a particular place? How do we survey to predict future outcomes in a place? These answers are found in demographics.
Demographics is the statistical characteristics of human populations (such as age or income) used especially to identify markets, or markets within markets (sub-markets).
Further definitions of demographics: the statistical data of a population, especially those showing average age, income, education. The characteristics of human populations and population segments, especially when used to identify consumer markets.
My definition of insight is gaining specialized knowledge from information. Determining the value of an asset lies within understanding the people who live in and around the subject property.
Without first having baseline demographic information there is no cause to “go see” a potential buy. Traveling to a property without first knowing the demographics, in my view, means all you are really doing is sight-seeing.