> For the complete documentation index, see [llms.txt](https://knowledge.aterio.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://knowledge.aterio.io/data-products/us-population-forecast-and-economic-development-indicators/aterio-indices-and-score/methodology.md). # Methodology ### Overview Aterio scores every United States ZIP code on its underlying residential real estate fundamentals. It is designed to answer one practical question at national scale: where are the conditions for residential investment strongest, and why? The assessment rests on six independent dimensions: population momentum, the balance between housing demand and supply, household financial capacity, economic development, downside risk, and investment opportunity. Each is scored separately, and the six are then combined into a single headline measure, the Aterio Score. Both the headline score and the six underlying dimensions are delivered together with the evidence behind them, so that every result can be understood and challenged rather than taken on trust. A ZIP code does not simply score well. It scores well for reasons that are visible in the data alongside it. ### How the assessment works #### A comparative measure Every dimension positions a ZIP code against the full national distribution. A high score means the area performs strongly relative to the rest of the country on that dimension, rather than having crossed a fixed threshold. This makes the measures well suited to screening, ranking and shortlisting across large geographies. #### Consistent direction Five of the six dimensions are oriented so that a higher value is more favourable. The exception is Risk Factors, where a higher value indicates greater exposure. When the six are combined into the headline Aterio Score, the risk dimension is inverted, so the headline reads consistently: higher is stronger. #### Built for comparison, not prediction The assessment describes the fundamentals of a market as they stand, and the trajectory those fundamentals imply. It is a framework for comparing places rather than a forecast of returns on any individual asset. ### 3. The six dimensions #### 3.1 Population and Migration What it answers: *Is this market growing, and how much of it is there?* What it measures. Demographic momentum: the scale of the resident population today and, more importantly, the direction and pace of its projected change over the coming decade. Both matter, but trajectory is weighted more heavily than size. A smaller market on a strong upward path will score above a larger one that has stalled. What informs it. Decennial census counts, Aterio's proprietary population forecast running through 2035, county-level net migration statistics, and independent academic population projections used as a cross-check. How to read it. High values identify areas gaining residents. Because population growth precedes housing demand, this dimension is the leading indicator in the framework, and it carries the greatest influence on the headline score. #### 3.2 Demand and Supply What it answers: *Will there be enough housing here?* What it measures. The balance between the housing that will be needed and the housing that exists. Projected population is translated into projected housing need using the way households in that specific area actually occupy homes, then compared against the current stock. What informs it. Census housing inventory, local household occupancy patterns, residential building permit activity, and Aterio's population forecast. Vacancy and owner-occupancy measures are reported alongside as supporting context. How to read it. High values indicate a projected shortfall, with demand outpacing available stock. These are the markets where supply pressure tends to translate into pricing power for owners and into opportunity for developers. Low values indicate an area already well supplied relative to what its population is expected to need. #### 3.3 Capacity to Pay What it answers: *Can households here afford to live here?* What it measures. The financial strength of local households relative to local housing costs. It brings together how much households earn, how that income is distributed across the area, how much debt households carry, and how local home values stand in relation to local incomes. What informs it. Census household income levels and income distribution, Federal Reserve household debt-to-income statistics, and prevailing local home values. How to read it. High values indicate residents who can comfortably support housing costs, which supports both price stability and reliable rent collection. Low values flag markets where housing costs have moved ahead of local earning power, a stress signal even where prices are currently rising. #### 3.4 Economic Development What it answers: *Is the local economy outperforming the country?* What it measures. The strength of local economic output growth measured against the national average, with particular emphasis on real-estate-linked activity rather than the economy as a whole. The dimension is deliberately relative: it rewards areas pulling ahead of the national trend. What informs it. Bureau of Economic Analysis county economic output statistics, overall and by sector. Business establishment counts, labour force participation and employment measures are reported alongside as supporting context. How to read it. High values indicate a local economy expanding faster than the country as a whole, particularly in the sectors most closely tied to property. Because the underlying statistics are published at county level, this dimension describes the wider economic region a ZIP code sits within. #### 3.5 Risk Factors What it answers: *What could go wrong here?* What it measures. Downside exposure across the conditions that most directly affect whether residents stay, whether tenants pay, and whether property retains its value: local labour market weakness measured against the long-run national norm, violent and property crime, and the quality and safety of the public drinking water supply. What informs it. Bureau of Labor Statistics county unemployment data, FBI crime statistics, and Environmental Protection Agency drinking water compliance records. How to read it. This dimension runs in the opposite direction to the others. A higher value means greater risk, and it is inverted before it contributes to the headline score. Alongside it, the dataset separately reports natural hazard exposure, expected annual loss, community resilience, social vulnerability, flood insurance coverage and cost, mortgage default history and home ownership rates, each available as its own measure so that clients can apply their own risk lens. #### 3.6 Opportunity What it answers: *Does the income justify the price?* What it measures. The investment return characteristics of the market: how prevailing local rents compare with the cost of financing a typical home at current mortgage rates, adjusted for how stable local home values have been over the preceding two years. Yield carries the greater weight, with price stability moderating it. What informs it. Zillow home value and observed rent indices, prevailing thirty-year mortgage rates, and two years of local price history. Federal fair market rents and census rent measures are reported alongside as independent reference points. How to read it. High values indicate markets where rental income covers financing comfortably and where values have held steady. Low values indicate either thin yield or an unstable price base. This dimension depends on sufficient local market activity to be measured reliably. Where that activity is too sparse, typically in very rural areas, it is not reported, and the headline score is built from the remaining five dimensions instead. ### 4. The Aterio Score The Aterio Score brings the six dimensions together into a single headline measure. It is a weighted combination rather than a simple average, because the dimensions do not carry equal predictive value. Population momentum carries the greatest influence, reflecting the view that demographic trajectory is the most durable driver of long-term residential demand. Housing supply balance and downside risk follow closely. Household financial capacity, economic development and investment yield each carry a lighter but material influence.
DimensionInfluence on the headline scoreDirection
Population and MigrationGreatestHigher is stronger
Demand and SupplySubstantialHigher is stronger
Risk FactorsSubstantialLower is stronger
Capacity to PayModerateHigher is stronger
Economic DevelopmentModerateHigher is stronger
OpportunitySupportingHigher is stronger
Where a market has insufficient pricing activity for the Opportunity dimension to be measured, its influence is redistributed across the remaining dimensions rather than treated as a zero. This keeps the headline score available and meaningful in rural and low-transaction markets while remaining transparent, because the dimension itself is shown as unavailable rather than filled in. Population momentum is the one dimension treated as indispensable. Where an area's demographic trajectory cannot be established with confidence, typically in very small or unusual ZIP codes, no headline score is published for it. Aterio would rather report nothing than report a figure it does not stand behind. ### 5. The data behind the assessment Aterio builds on established, citable sources rather than opaque inputs. The great majority of the assessment rests on official United States government statistics, supplemented by leading commercial market data and Aterio's own forecasting work. #### Official statistics
SourceContribution
US Census BureauPopulation counts, household income and income distribution, housing inventory and occupancy, home ownership and vacancy, labour force and employment, rent levels, building permits, business establishments
Bureau of Labor StatisticsCounty unemployment
Bureau of Economic AnalysisCounty economic output growth, overall and by sector
Federal ReserveHousehold debt-to-income, mortgage rates, net migration
Federal Bureau of InvestigationViolent and property crime
Environmental Protection AgencyPublic drinking water compliance and contamination
FEMANatural hazard risk, expected annual loss, community resilience, social vulnerability, flood insurance coverage and cost
Housing and Urban DevelopmentFair market rents
Federal Housing AdministrationMortgage default history
#### Market data
SourceContribution
ZillowHome value and observed rent indices, with multi-year history
Realtor.comListing prices, days on market, listing and pending inventory, price movement and market activity measures
#### Aterio proprietary
SourceContribution
Aterio population forecastZIP code level population projections through 2035
Aterio climate resiliencyComposite climate resiliency assessment
Independent academic population projections are also used as a cross-check on Aterio's own forecast where local coverage requires it. ### 6. What is delivered Alongside the headline score and the six dimensions, each ZIP code record carries the supporting evidence, so that any result can be examined directly. * Population and demographics. Resident population from 2010 to the present and Aterio's projection through 2035, with growth rates over standard intervals and across the pre-pandemic, pandemic and post-pandemic periods. * Housing. Housing inventory, projected housing need, the resulting balance, owner and renter occupancy, vacancy rates and building permit activity. * Household finances. Average household income, the distribution of households across income bands, household debt burden, and the relationship of local home values to local incomes. * Economy and employment. Business establishment counts and their growth, labour force size, employment and unemployment, and county economic output growth by sector. * Pricing and yield. Home values and observed rents at current, six-month and twelve-month points, price direction and rate of change, momentum and volatility measures, an indicative financing cost, and the resulting relationship between rent and financing. * Rents. Federal fair market rents and census rent levels, each broken out by property size. * Risk. Unemployment, crime rates and their standing against the national average, drinking water quality, natural hazard exposure, expected annual loss, community resilience, social vulnerability, flood insurance coverage and cost, mortgage default history and home ownership. * Live market activity. Listing prices and price per square foot, days on market, new, active, pending and reduced listings, and market activity measures, each with month-on-month and year-on-year movement and comparison against the national picture. * Geography. Coordinates, city, county, metropolitan area and state, land and water area, and population density. ### 7. Coverage and refresh
AspectDetail
GeographyUnited States, one record per ZIP code
RefreshMonthly
Market dataHome values, rents, listing activity and unemployment refresh monthly
Official statisticsRefresh on each publishing authority's own schedule, typically annually
VersioningEvery record carries the methodology version and the date it was produced, so results can always be traced to the basis on which they were calculated
HistoryA monthly historical record is retained
Because official statistics are published on annual cycles, the dimensions built on them are stable by design. Month-to-month movement in the headline score comes principally from live market pricing and labour market conditions. This is the intended behaviour, since structural fundamentals should not oscillate monthly. ### 8. Important notes * The measures are comparative. The dimensions position each ZIP code against the national distribution as it stands at the time of production. They are designed for comparing markets with one another rather than for measuring against a fixed absolute standard. * Compare within an edition. Because each edition is calculated against the national picture at that point in time, scores are directly comparable within an edition. Comparison across methodology versions should account for the version recorded against each result. * Coverage varies by market. Some measures require a minimum level of local activity or population to be reported reliably. Where that threshold is not met, the measure is shown as unavailable rather than estimated, and that availability is visible in the data itself. * The financing figure is indicative. The financing cost reported alongside the Opportunity dimension is an indicative reference based on prevailing national mortgage rates and the local home value. It is intentionally simplified and does not represent a quotation, an underwriting decision, or the full cost of ownership. * This is not investment advice. Aterio Investment Insights is a market analysis product. It describes market fundamentals and is not investment, financial, legal or tax advice, and it is not a recommendation regarding any specific property or transaction. Users should apply their own diligence and judgement. ### 9. Glossary
TermMeaning
Aterio ScoreThe headline measure, combining all six dimensions into a single comparative assessment of a ZIP code's residential investment fundamentals. Higher is stronger.
DimensionOne of the six independent components of the assessment, each scored and reported in its own right.
ZIP codeThe geographic unit of the assessment. Each ZIP code is assigned to a single county, city and metropolitan area so that regional measures attach consistently.
MomentumA measure of how sustained and one-directional recent price or rent movement has been, distinguishing steady trends from short-lived swings.
VolatilityA measure of how much local values have fluctuated over the preceding two years. Lower volatility indicates a more stable market.
Fair market rentA federally published rent reference by property size, used as an independent benchmark alongside observed market rents.
Metropolitan areaThe wider statistical region a ZIP code belongs to, used to place local results in regional context.
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