We’ve just finished a phone conference with several of our brainiest advisors, team members, and consultant types. 

Since developing our market assessment data collection process and tools, we’ve typically undertaken major resets of how we rank key variables at year end.  There was nothing magical or statistical about doing it then, we simply chose that time frame and have used it for several years. 

We would typically reset how we scored employment growth and unemployment, and variables for both multifamily housing and single family housing metrics; we would reset ranking criteria to match changes in the market place of import. 

Well, so far 2008 has been a year of significant change in many areas that we’ve been tracking – nonfarm employment growth rates and unemployment to be certain, as well as many of the metrics we follow for multifamily and single family analysis. 

We’ve been bantering back and forth about the necessity to update our ranking systems to reflect the changes that have and are occurring before the end of the year, and today we reached consensus on a number of variables that need to be fine tuned so that we can more accurately track, rank, and make sense of what’s happening in markets. 

We’ll be sharing what we’re changing, why, and how it improves our results over the next few days on the blog, and we’ll have a detailed explanation in the September newsletter for you subscribers. 

Of particular interest to multifamily investors – we are changing the relative contribution that single family markets have on our multifamily scoring (we call it the Single Family Impact Score), and we expect a slight shuffle in our multifamily rankings coming up.  We’ve taken a fair amount of heat for how we’ve ranked some multifamily markets in which single family is a disaster, and the changes we’ve come up with will clarify that relationship even further. 

We’re really excited about these revisions; the testing we’ve done with about 20% of our markets shows some fascinating results that we feel are much more representative of what we’re trying to accomplish – finding emerging or recovering real estate markets with sound fundamentals.  From the testing, we feel that our rankings will probably improve more for multifamily than single family, perhaps in part to the higher level of complexity involved in ranking multifamily markets. 

Once we’re absolutely convinced we have all the changes programmed exactly correctly, we’ll convert the entire database over market by market, and re-rank every data category we’re tracking.  Our data team will groan a bit on Monday, but they’ve been a part of the entire process as we’ve looked at implementing these changes a few months early.  The conversion update should take about a week if we really hustle. 

Finally - now it’s time to hit Yellowstone…..

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