Predicting the next hot market in real estate is a talent worth its weight in gold for both the real estate sales person as well as the land mogul. Many seasoned veterans, and even some novices, might be able to predict when and where these markets will appear. However, for most, short of consulting a crystal ball, predicting when and where the next hot market will appear can be somewhat daunting. But with the right arsenal of tools, the ability to predict future hot markets can seem more scientific than an enigma. These tools are concepts found in marketing, city planning, and a theory referred to as concentric rings.

The marketing, or lack of marketing within an area provides two important insights into the growth and prosperity of a community. First, one should consider the types of advertising appearing on billboards, store windows, and on other signs either in or surrounding a particular area. Advertisers spend millions of dollars each year researching markets that will support their product or service. Therefore, if you are seeing billboards with pregnancy prevention messages for example, an outsider may be led to believe that the area experiences issues with teen pregnancy. Therefore, the area will probably not be an area of choice for families that have teens or preteens.

The second type of advertising commonly found in a community is related to place identity and/or comodification. Put simply, these are terms that relate to the area’s reputation and net worth. In an area that is trying to redefine its reputation (stimulation of gentrification) one of the first clues will be the appearance of banners attached to lampposts along the main street. These banners serve the same function as the word Mercedes splashed along the back of an automobile, they attach a psychological meaning to the area. “Restaurant Row,” “Old World Charm,” and Premier Arts community,” are all examples of how a community develops an identity. A passerby reads the banner “Restaurant Row,” then the next time they want to go out for a meal they think of Restaurant Row and assume that there ought to be a variety of choices and good food in this area.

Also, within these areas one will typically see developers erecting multiunit or commercial complexes. In order to sell or rent these spaces a concept image is created and displayed on the project site as well as other advertising venues to attract the desired clientele. The concept image however is nothing more than an idealistic rendition of the area’s potential. But often the old cliché “birds of a feather will flock together,” will stimulate an idealistic rendition into reality.

Another clue to the prediction of the next hot market is the renovation of infrastructure within an area. If the city is allocating funds to resurface roads, repair sidewalks, and develop green spaces such as medians with plant and tree life then you can be reasonably assured that the housing demand within the area will increase. Green spaces are known to reduce stress (such as road rage) and instill feelings of safety and security, which translates to a higher probability of area appeal. Also, no one likes to travel on roads riddled with potholes and patch jobs, which means without good road conditions the area may be avoided, especially by those who fret damage to their automobile. Lastly, foot traffic is a benefit to area merchants and visitors because merchants typically increase business when foot traffic increases, and foot traffic makes the statement, “this area must be a safe”. However, poor sidewalk conditions along with the lack trees along the causeway (strip of grass between the sidewalk and the road) are strong deterrents to foot traffic. The trees and grass not only offer shelter from nature’s elements, but deep-rooted trees offer pedestrian protection from stray automobiles.

Then there is the concept of concentric rings. The concept here is that human behavior mandates that a person will live within one of the rings that surround a major focal point of human gathering. To best explain this concept think of a target used for target practice. Then, think of a unifying agent being at the center of that target. Sometimes this unifying agent can be thought of as a city’s central area, but it can also be thought of as a primary place of employment. Please note that areas like large metropolitan cities can have several “targets” as long as the center of the “target” serves as the gathering point. The idea is that every additional ring that radiates out from the central focal point the less value the property will have until finally a point is reached, which is about 75 to 90 minutes (1.5 hours) traveling time, when the audiences intended to support the focal point are exhausted.

Concentric Rings have many applications for understanding real estate such as discussing housing evolution, identifying consumer markets, understanding cultural enclaves, identifying centers for employment, and much more. For the purpose of this article, one would want to watch a community for a catalyst of human gathering. Ball parks seem to be one such catalyst for today’s urban environments. So, when a Ball park is slated for development, one would draw rings around the site to be developed. The closer a market falls within the rings to the actual site to be developed, the hotter that market.

To recap, selecting the next hot market can be done by one or any combination of the following three ways: watch to see if there are marketing endeavors taking place such as community banners attempting to establish place identity, watch what the city is doing with regard to resurfacing roads, fixing sidewalks etc, and/or locate communities that fall within the first two radiating rings of a major job site development or recreational forum. Typically, when all three of these clues can be seen at once it is too late and that market has all ready started to heat up. But, to the observant individual, one or two clues from the methods listed may spring up indicating a prelude to the next hot market.

Published: January 21, 2003

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David Alan Kopec "DAK" has a Ph.D. in Environmental Psychology with a concentration in perception and design and two master's degrees, one in Architecture and another in Community Psychology. He also has a bachelor's degree in community/public health, is certified by the National Commission for Health Education Credentialing (NCHEC), a member of Interior Design Education Council (IDEC), and studied the practice and principles of Feng Shui in China. Among DAK's most notable accomplishments include the completion of the first textbook on environmental psychology for design, published by Fairchild Books, which won ASID's 2006 Joel Polsky Prize. He has also authored two monographs; the first analyzes the Americans with Disabilities Act along with the common issues faced by an elderly population, published by ASID. The second monograph discusses the design of long-term care facilities in a multicultural society. This is being published by NCIDQ. Currently DAK is working on a second textbook that analyzes health, sustainability and design. Fairchild Books will release this book in the Spring of 2008. Also, DAK is a 2006 award recipient from Rebuilding Together San Diego. DAK is an Associate Professor of Design at the Newschool of Architecture and Design. In addition, DAK has a private practice, provides consulting services and educational lectures at events such as Neo-Con World’s Trade Fair in Chicago, the annual leadership conference for the American Society for Interior Designers (ASID), and dozens of physician conferences and meetings.