What is density, and how can we use it to identify early real estate investment opportunities?

There are many ways to look at geographic data, and when we started developing a Deepblocks index for investment, we hit a few stumbling blocks. 

For example, when we looked for census tracts with the highest population growth, the result was always the largest tracts. Although interesting, for our purpose, these results are deceiving. If the tract is large enough, even with suburban sprawl, it will show up as a tract of interest. 

We realize that density was a crucial investment metric. 

What is density?

Density is the degree of compactness, and this is what we find most interesting. Where are people compacting? 

The most compacted areas of a city are usually in the downtown or financial districts. If we can find the highest density, we find downtown. Without knowing a city, we can instantly point to it. 

How to use density as an investment metric?

We adjusted all our metrics from total value to density value. This shift was relevant across population growth, construction activity, existing building inventory, and future development potential. 

Our investment index is finding the areas that are growing in density, attracting people and businesses, and in many ways, on the path to urban efficiency. 

Get in touch if you are interested in creating your own investment index.

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