How Far for How Many Folks??

Real Estate Market Potential vs Distance

KICKSTART QUESTION:  Back in late 2007 -- I had a real estate investor client ask: 

Q: "Well how many folks are in range of the site prospect?  I do not want to spend big bucks on marketing for a 'bum' site!  It is 'OK' to 'get in' -- or better to just move onto another prospect."   

Preliminary answer required a couple of days to aggregate the demographic and map data and provide an answer the question.  Eyeball anchor graphics and interesting results below.

HISTORY -- Demographics is Destiny -- as the saying goes.  Yet a little econo-metric background will help others understand the context of the question -- and see the magic biz decision tradeoffs.  

TEXAS POPULATION SHIFTS -- Reaching back to 1850s Texas -- this animated graphic should help others see the changing population patterns -- and how real estate investors must "map bet" on the "right spot" -- to catch a population wave:

Full Size: Texas Population Shift Map 1850-2030

Map from Texas State Data Center

SIGNIFICANCE and CHALLENGE -- A population shift that "washes over" your real estate prospect will float your boat to success.  Rising tide raises the ship.  If the investor picks wrong -- the population tide rolls away from his boat -- and leaves his investment stuck in the mud.  My real estate investor wanted to "see the wave" relative to his potential site -- sorted by ZIP code -- to aid marketing cost analysis.  Data resolved to county level is OK for state-wide demographics -- yet not so good for ZIP code marketing.  Please recall there were no ZIP codes before 1960s.

ALTERNATE SNAPSHOT APPROACH -- Time snapshot "wave" -- like a strobe light catching a frozen body position of a dancer: US Census data can be a rough snapshot of a frozen population wave.  In order to simulate a "data wave" of population -- the ZIP code population data needed to be "sorted" and made a "function" of radial distance from my client's site -- to see the "time wave" snapshot.

Zip Code Lines and Regions in Reno Nevada

ODD DETAILS:  US Census data is roughly "anchored" to the map via something called "Zip Code Tabulation Areas" -- ZCTA -- by the US Census.  

The kick in the head?  ZIP Codes are not really "areas" -- as the US Post office uses ZIP Codes for lines (roads / trails / rails lines) -- and for points (single buildings or foreign post office exchange) -- and sometimes for areas.  In other words Zip Codes are "optimized" for US Post office mail delivery -- and not for population demographics and mapping.  

The US Census has derived ZCTA that more-or-less "anchor" a ZIP Code to an area -- and "blurs" the line and point details.  ZCTA make it *mostly* possible to tie a ZIP Code to a lat-long point on the globe (database table "Join" or "GeoLink" via ZIP Code). 

RESULTS -- Results below -- and is a quick-look demographic from 2004 populations within a given radial range or distance from a selected site -- in this example -- a parking lot site [29.7771º N, 98.8071º W] -- well known to the client -- and roughly near Boerne Texas.

Smoke Rings of Population Accumulation

Click Image for Full Size Map

SMOKE RINGS -- Expanding numerical 'smoke rings' of distance were swept over the 2004 Census zip code centers -- and population values associated with each zip center -- were treated as a differential impulse to aggregate population within various rings of range or distance.   Each impulse was "added up" (cumulative distribution curve).  Result chart:

Red: ZCTA Population Impulses vs Range

Blue: Sum of Population Impulses

Click on Image for Full Size Chart

SUMMARY -- My real estate investor client used the above chart (and various generated XLS tables and maps) to estimate marketing outreach costs for his prospect site.  This was a "knife edge" quick look test before placing and option on the prospect.  Marketing costs were a "real" cost to "get in" and promote the site -- and "range analysis" -- such as the above often helps with the problem question "Hey, is the market wave coming my way -- or not?"