Saturday, May 9, 2009

Seeing Patterns Where There Are None: Geography

Humans are wired to detect patterns, but sometimes there isn’t one. For example, what distinguishes the best and worst performing submarkets in Orange County?

You might focus on geography first; the real estate mantra is location, location, location. Are the best and worst performing submarkets concentrated in a particular area?

Here’s a map, with the five best performing markets (as measured by combined occupancy and rent change) highlighted in green, and the worst ones in red:


Looking at this, you would have to conclude there’s not a pattern; the best performing and the worst performing markets are pretty will mixed up.

The data is for the first quarter 2009 from RealFacts, as reported by Lansner on Real Estate.  Here’s the chart accompanying the story; can you find a pattern in the occupancy and rent changes?