An economist’s tour from Wall Street to Main Street

Realtors® are often looked at by clients as local economic experts. With expectations to time markets precisely, identify future purchase/sale opportunities before anyone else, and ultimately apply all of this to determine the optimal purchase or sale price for projects having multiple year outlooks. Of course this comes easy with a crystal ball, but if you don’t have access to one knowing a few data points and having the right resources can vastly improve your odds at projecting things accurately. Lucky for Realtors®, experts like George Ratiu are here to guide us in how to better use a tool like RPR Commercial in order to mine economic insights.

INTERVIEW

George Ratiu
George RatiuManaging Director, Quantitative & Commercial Research
National Association of REALTORS®
@GeorgeRatiu

Nathan Graham (NG): Tell us a little about what you do at NAR Research.

George Ratiu (GR): My focus is on the macroeconomics side of things so I spend a lot of time looking at specific measures of the economy such as GDP, employment rates, and then on the financing side, at interest rates. I concentrate on tying these back to real estate in order to explain housing trends, and where things may be going. Another big part of our work is in surveying members. A great example of this is the quarterly Commercial Real Estate Market Survey, which helps us shine a light on what is happening in Realtor® markets, which tend to be the smaller, non-major metros which don’t get a lot of attention from most research companies.

NG: What is the most difficult issue you encounter while collecting data around commercial real estate and how do you overcome it?

GR:The biggest obstacle is with the large variation of commercial properties within sectors and the often small number of similar properties in each sector for markets to produce good granular data. This is why we rely on Realtor® sentiment to provide insight into what they see going on in those sectors since they are in the trenches.

NG: What tip would you give Realtors® who want to better understand where their local market may be heading?

GR: To better understand the role that zoning and planning boards play in directing the pace and location of their community’s development. By knowing things such as which companies are coming to town and which areas should see job creation, you can better position clients to take advantage of where growth is going to happen.

NG: What are some of the demographic or economic factors you look at to understand where a local economy may be heading?

GR: Employment is crucial. Knowing who the major employers are and which industries are growing is important because employment drives demand for all real estate.

NG: Is it possible for someone to gage what stage of the market cycle a commercial sector is in and if so how would you go about doing that?

GR: This will vary by market, but traditionally smaller markets lag larger ones on both the up and down swing of a cycle, making them less volatile overall. So paying attention to national averages is a good start, but focusing on the regional and local markets is crucial. You can also look more regionally for indicators with different sectors using different indicators such as tourism for hospitality, volume of shoppers for malls, employment for office space, etc.

NG: What would be a few practices that a Realtor® could implement to be better informed about their local economy?

GR: The key is to understand where the data is coming from, what it is measuring and how the researchers are developing their results. Being comfortable with the process will give them more confidence to discuss the data with clients.

Commercial Real Estate Market Survey

Commercial Real Estate International Business Trends 2017

Business Creation Index

Now that you have some insight from an economist, it’s time to start collecting data and attending your local planning or economic development council meetings. To brush up on your local market, check out RPR’s Trade Area Reports where you can see demographics, economic data and even learn about community preferences via Esri’s tapestry segmentation.

Click to view report

About George Ratiu

George Ratiu is Managing Director of Housing & Commercial Research with the National Association of REALTORS® in Washington, D.C. He oversees research programs focused on macroeconomic trends, real estate, and global investments, and oversees the production of housing market statistics and commercial real estate reports, such as Existing Home Sales, the Pending Home Sales Index, and NAR’s Commercial Real Estate Outlook. He provides economic and industry insights as a regular columnist for the Commercial Property Executive and SIOR Report, and promotes the REALTOR® brand in major media outlets and keynote presentations across the U.S. He also directs national projects focused on market performance, investment and financing, including the REALTORS® Confidence Index report, NAR’s Commercial Real Estate Market Trends, International Commercial Real Estate Business Trends and Commercial Real Estate Lending Trends.

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