Real estate market analysis is a critical part of the home buying process.
Whether you’re buying a home to live in, or to support an investment strategy, you need to know what the real estate market is like now—and what it might do in the coming years.
In this guide, I’ll share some of my favorite real estate market research techniques, tools, and strategies that you can use to make better-informed decisions.
This in-depth guide is divided into three sections:
- Factors that influence the housing market
- Step-by-step guide to research and analysis
- Useful resources with relevant data
Part 1: Factors That Influence Housing Markets
Let’s start with some basics by exploring the key factors that can influence local real estate market conditions in your area.
1. Population Growth and Migration
When more people move into an area—whether from another city, state, or country—it creates more demand for homes and rentals.
- Fast‑growing markets (like Austin and Phoenix during the pandemic) often experience supply shortages, which pushes home prices up.
- On the other hand, if people are leaving an area in large numbers (as happened in some Rust Belt cities), it can cool and slow the market.
In short: An influx of new residents usually leads to higher demand and rising home prices, while a steady outflow can lead to weaker demand and falling prices.
2. Job and Wage Trends
Real estate demand often follows jobs.
Cities and metro areas with strong local economies and job engines attract new residents from other areas, which in turn supports the housing market.
When researching your local real estate market, pay close attention to job trends. Analyze the unemployment rate and how it has changed in recent years. Find out if there are new developments or companies that might boost job growth going forward.
Research local wage growth as well. If incomes aren’t keeping up with home‑price gains, affordability starts to slip, and fewer buyers can qualify.
In short: Strong employment and rising wages support a healthy housing market, while weak job growth or stagnant incomes can slow things down.
3. Inventory Levels (Supply)
Supply levels can have a significant impact on local real estate market conditions, affecting everything from home prices to buyer and seller negotiating leverage.
- Low inventory (measured in “months of supply”) means buyers are competing for a small pool of listings, which tends to drive prices up.
- High inventory gives buyers more choices and negotiating power, which can push prices down or slow their rise. It can also cool the market in general.
In short: When there aren’t enough homes for sale, prices tend to rise. When there are plenty of homes on the market, buyers have the upper hand.
4. New Construction and Development
Building activity directly affects supply levels, which in turn can influence the real estate market.
When researching and analyzing your local housing market, look into current and planned construction for single-family homes, mixed-use residential, and apartment complexes.
- A surge in new construction can ease inventory crunches, give buyers more choices, and create a more balanced real estate market.
- A lack of building (perhaps due to labor or materials shortages, or other factors) keeps supply constrained and gives sellers the upper hand.
In short: More building helps meet demand and stabilize prices, while limited development keeps inventory tight and prices elevated.
5. Mortgage Rates and Credit Availability
The cost and ease of borrowing money (via mortgage loans) can affect buyer demand. By extension, it can also influence the broader market, home prices, and more.
Lower interest rates allow people to borrow more for the same monthly payment, widening the pool of qualified buyers.
On the other hand, tight lending standards and/or higher mortgage rates can shrink the buyer pool, softening demand and price growth.
Five More Factors to Consider
The five factors above can influence your local real estate market in a big way. So they should make up the core of your housing market research and analysis efforts.
Here are some additional factors to consider:
- Affordability Metrics: Home-price-to-income ratio or share of income for mortgage—when it spikes, buyers pull back.
- Demographic Shifts: Changes in age or household mix (e.g., retirees vs. first-time renters) steer which home types sell.
- Infrastructure & Transit: New highways, rail lines, or corporate campuses lift values; poor transit and long commutes hold them back.
- Regulation, Taxes & Incentives: Zoning, property taxes, rent control, and buyer credits all tilt the market toward buyers or sellers.
- Investor Activity & Short-Term Rentals: Heavy investor buying (especially for Airbnb-style rentals) cuts into supply and drives up prices.
Part 2: A Step-by-Step Guide to Market Research
Now that we understand the various factors that influence market conditions, we can create a plan for researching and analyzing the local housing market.
This process can vary based on several factors. For example, real estate investors might research the market differently (and often more extensively) than a regular home buyer would.
So let’s create a basic, step‑by‑step playbook that will work for most scenarios:
1. Define Your Target Area
Start by identifying the location and geography you care about most: city, metro area, ZIP code or specific neighborhood.
Be precise and focus on your target area. If you lump together neighboring towns or adjacent cities, you’ll get mixed signals and a cloudier picture.
2. Track Recent Price Trends
You can research local home prices through Zillow (Google your city plus “home prices Zillow”), the Redfin Data Center, and through other sources.
Gather data from the last 12-24 months of median sale prices and percent‑change charts. This will show whether local home values have been rising or falling, and by how much. You might also find that prices have been flat or “moving sideways” in recent months.
No one can predict future real estate trends with complete accuracy. But this kind of research will give you a better sense of where prices might be headed in the near future, based on supply and demand factors.
3. Measure Supply and Demand
Look at current active listings and calculate “months of supply” (total listings ÷ monthly sales rate). Under 4 months typically favors sellers; over 6 months favors buyers.
The Redfin Data Center shows months of supply for most U.S. cities, among other useful metrics. So be sure to add that site to your market research toolkit.
Also check the percentage of price reductions in the market. A high share of listings that drop their price signals weakening demand, while a lower share indicates the opposite.
Pro tip: Supply and demand is really what drives real estate markets, both now and into the future. So it’s in your interest to research and monitor these trends closely.
4. Look for Local Economic Signals
Look up recent job reports or press releases for big employers moving in or cutting back. Use county or state labor websites, local business journals, etc. Note any major layoffs, new corporate campuses, or infrastructure projects announced in the last year.
Strong local economies and job growth tend to attract new residents, which supports the real estate market for both purchase and rental. On the flip side, economic weakness and a shrinking job market can send a chill through the housing market.
Pro tip: Find news reports on the “job market” and “local economy” for your area. Include those keywords along with the city name. Search back at least a year.
5. Read Expert Forecasts
With a bit of Google research, you can find a variety of housing market forecasts for your chosen area. Expert forecasts can help you understand where the market might be headed, to guide your decision-making and purchase plans.
Browse Realtor.com’s monthly Market Trends outlook or single‑page summaries from your local Realtor association. Pay attention to their “price forecast” or “market direction” bullet points.
(And if you haven’t done so, subscribe to our newsletter to receive weekly forecasts.)
Pro tip: You can also use AI “deep research” mode to gather forecasts for your target market. This is an excellent real estate research tool that can save you countless hours.
6. Evaluate Local Housing Affordability
A quick way to see if homes are becoming more or less affordable in your area is to compare home prices to local incomes.
Start by finding the median home price and the median household income for your area. The Census website is a good place to begin your search.
Next, divide the home price by the income. For example, if the median home costs $400,000 and the median income is $100,000, the ratio is 4.
If that number is over 4, it usually means homes are getting harder to afford for typical buyers.
For comparison, the national average is usually between 3 and 3.5, so anything higher than that can be a red flag for affordability.
Key point: More affordable housing markets are less likely to experience price corrections (drops) in the future, since there’s a larger pool of qualified buyers.
7. Summarize Your Findings
You’ve done your real estate market research, analyzing key factors related to supply and demand, inventory, growth and more. Now it’s time to draw out the upsides and downsides.
Write some bullet points under “Strengths” (e.g., low supply, rising jobs) and “Warnings” (e.g., high prices, rising interest rates). Decide whether the market’s momentum and your budget line up—or if it makes sense to wait for more favorable conditions.
This seven-step housing market research plan will give you a clear, fact‑based picture of local market conditions, allowing you to make better-informed decisions.
Part 3: Useful Resources to Guide Your Research
You can use the internet to conduct in-depth real estate market research and analysis, but only if you know where to look. Here are some of the sites I use and recommend.
Zillow Research
Comprehensive data on home‑price trends, rents, inventory and more. You can filter by metro, MSA or ZIP code, and download charts or raw numbers.
https://www.zillow.com/research
Redfin Data Center
Includes monthly snapshots of home‑sale prices, sale‑to‑list ratios, and competition metrics, sorted by metro area. Good for local analysis and regional comparisons.
https://www.redfin.com/news/data-center
Realtor.com Market Trends
Local market overviews with median listing prices, time on market, inventory levels and forecast commentary. Covers most U.S. metros and major counties.
https://www.realtor.com/research/reports/market-trends
National Association of Realtors (NAR)
Weekly and monthly reports on pending home sales, existing‑home sales, affordability indices, plus quarterly metro profiles.
https://www.nar.realtor/research-and-statistics
U.S. Census Bureau
American Community Survey: offers demographic and housing‑stock data down to the census‑tract level.
Building Permits Survey: Shows monthly permit counts for single‑family and multi‑family construction.
https://www.census.gov/programs-surveys/acs
https://www.census.gov/construction/bps/index.html
Federal Housing Finance Agency (FHFA) House Price Index
Tracks changes in home values for properties with conforming loans (Fannie Mae & Freddie Mac), available by state and metro.
https://www.fhfa.gov/data/hpi
Freddie Mac & Fannie Mae
Freddie Mac Primary Mortgage Market Survey: weekly average mortgage rates.
Fannie Mae Economic & Housing Research: outlook reports and local market briefs.
https://www.freddiemac.com/pmms
https://www.fanniemae.com/data-and-insights
Bureau of Labor Statistics (BLS)
Local-area unemployment rates, employment by sector, average wages. Pair this with housing metrics to see how jobs and paychecks drive demand.
https://www.bls.gov/lau
Local County Assessor and Recorder Websites
Free access to property records, assessed values, recent sales comps and tax‑roll data. Google “[Your County] assessor” to find yours.
City/County Planning or Building Departments
Permitting dashboards, zoning maps, upcoming infrastructure projects, and annexation plans. Valuable for spotting supply shifts before they hit the market.
Local MLS Broker Reports
Many regional Realtor associations publish free monthly “market snapshots” summarizing sales, listings and days‑on‑market. Check your local MLS or Realtor association site.
Proprietary Analytics Platforms (optional)
Services like CoStar, LoopNet (for commercial), RealPage or PropStream offer deep dives—often subscription‑based—but can be worth it for active investors.
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