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In our world today we\\u2019re seeing a shift in the way people work, commute, live, and much more. With these new trends, we\\u2019re seeing people move around the country, less tied to where they once were with many more people working from home than were just 8 months ago. Consequently, this has created new supply and demand imbalances in different markets. Once hot San Francisco has seen an exodus of white-collar tech workers leaving the city for lower cost of living locations. Where people once lived near downtown and large cities, they can now move to more rural locations. These are just a couple examples of shifts we\\u2019ve seen over the past 6 months.

We talked about some of these trends a couple of weeks ago and then followed that up with how to qualify deals in new markets. Let\\u2019s look at some metrics in analyzing markets for real estate investing.

By now you\\u2019ve heard the saying \\u201cthe 3 most important factors in real estate are location, location, location\\u201d, which I largely agree with. In the world of real estate investing, the location of a property can be described by its market and submarket. A market can be thought of as a city or town, and the submarket as a specific part or neighborhood of that city.

CBRE publishes several different commercial real estate reports, in those they categorize markets into 3 tiers.

Tier 1

• San Francisco
• San Diego
• Seattle
• Chicago
• Miami
• New York City

Tier 2

• Dallas / Ft. Worth
• Houston
• Denver
•  Atlanta
• Orlando
• Philadelphia

Tier 3

• Oklahoma City
• Jacksonville
• Charlotte
• Cleveland
• Kansas City
• Nashville

So what makes a market better or worse than another? Sports teams, great parks, no traffic, cool coffee shops? Well, close but not quite. Evaluating markets as a real estate investor, we\\u2019re concerned with two main metrics \\u2013 jobs and population. That\\u2019s what it all comes down to. Are there people who live in the market and have a job that allows them to pay rent? That\\u2019s what we\\u2019re focused on.

These two metrics \\u2013 job growth and population grown \\u2013 are indicators of a strong market. While we can never predict the future (i.e. \\u2013 COVID-19), we can look at historical trends and project those into the future. Generally speaking, jobs bring people. After all, you don\\u2019t see a booming population in Antarctica. Knowing this, we can sometimes gauge population growth in a market by looking at what jobs are expected to grow or relocate to the market. Oftentimes, employers will announce new locations, headquarters, etc. and we can use this to assess the increased population those jobs will bring to the market.

Now digging a bit deeper and understanding that we want people and jobs in a market, we can next look at employment rates. Employment rates are simply a percentage of people employed or unemployed. Our nation\\u2019s unemployment rate is generally in the single-digit percentages, although that number spiked to double digits during the initial phase of COVID-19.

Now I want to bring something up here. There really is no such thing as one housing market or a national housing market. The same thing applies to these metrics. There isn\\u2019t one unemployment metric. Rather these metrics broken down by markets, or states at the very least are what we should be concerned with, more on a micro-scale. Just because the U.S. unemployment rate may be 7%, doesn\\u2019t mean that\\u2019s what it is in your specific market. It may be lower (great) or high (uh oh). The Bureau of Labor Statistics reports unemployment rates and breaks this data down by markets, or Metropolitan Statistic Areas (MSAs). A good example of an MSA is Dallas/Ft. Worth and principal...'