Today’s housing market is hostile to home buyers because there aren’t enough homes for sale. Would-be buyers find themselves in bidding wars and in competition with cash offers.
At some point, the path to owning your own home will be less of a hassle. Here are signs to help you identify when the home buying process becomes less intimidating:
When apartments receive fewer offers
The competition among buyers has intensified this year. Houses sold in July 2020 received an average of 2.9 offers each; In July 2021, they received an average of 4.5 offers, according to the National Association of Realtors.
These are just averages. Many households receive a double-digit number of offers.
When the market cools down and the conditions are friendlier for buyers, “you won’t see multiple offers of 15 or 20, you may only have one or two other offers, or you are the only one,” says Selma Hepp, deputy chief economist at CoreLogic, a provider of real estate information and analysis.
When houses stay on the market longer
Of the homes sold in July, half had been on the market for 17 days or less, according to the NAR. This metric, known as the days in the market, is an indicator of the level of competition, and 17 days is a sign of a competitive market. For comparison, the average days on the market in 2019 was 59.5. Fast sales mean a lot of competition and slower sales mean fewer competitors.
“If things are going to stay in the market a little longer instead of staying a few days, then maybe it is time for [buyers] back on the market, “says Terri Robinson, real estate agent for Re / Max Distinctive in Ashburn, Virginia.
Robinson warns that she speaks of average days in the neighborhood, city and metropolitan market. It does not refer to individual properties. A particular home can stay on the market for a long time because the seller is asking too much. That would be a sign of a flawed sales strategy, not a cooling market.
When inventory and supply increase
In real estate language, “inventory” refers to the number of sales as well as pending sales, and “listing” is the number of months it would take to sell all homes in the market at the current monthly rate. Inventory and supply were low in 2021, a sign that sellers have a price and bargaining advantage.
With inventory and supply rising, this is good news for homebuyers. “That is certainly an indicator that you will have less competition because people have more houses to choose from,” says Hepp. She adds that larger inventory means you can expect fewer bids above the asking price.
What a good realtor can tell you
These indicators – average number of offers, average days in market, and inventory – are national, not local, figures. They are by and large suggestive. But relying solely on national data is like looking at a map of the United States to navigate from your home to the grocery store.
The most useful real estate information is local and is usually passed on from person to person. It can be downright chatty: how long this house has been on the market, how many offers the house that has just been sold has received.
“The easiest way for a person to get this type of information is to speak to their local real estate agent and ask these questions,” says Robinson. A realtor can tell you when a barrage of offers is reaching your target area, how many offers homes are receiving, and whether they will be on the market longer.
An agent can also provide you with less quantifiable information. Robinson says shoppers in their area, outside of Washington, DC, often skipped inspections earlier this year to make their listings more competitive. She knows an inspector who, in response to a need, “set up a walk-and-talk, that was an abbreviated home inspection that could be carried out while someone was looking at a property”.
The inspector recently announced that the demand for walk-and-talks has decreased and that buyers are once again receiving full-fledged inspections that take a few hours. “It shows that sellers are now more accessible to a buyer who walks in and requests a home inspection, so that’s good news for buyers,” says Robinson.
That’s the kind of juicy, useful anecdote you get when building a relationship with an agent who has a lot of contacts.
In addition to talking to a real estate agent, Hepp recommends signing up for emails from a real estate agent. You will receive notifications of new entries. It is just as important, says Hepp, to be informed about price cuts. “As soon as you see this, you will know that the market is no longer as competitive as it was,” she says.
Where you can search for data yourself
Perhaps subjective information is not good enough for you and you want confirmation of what you hear from real estate agents. Objective data fit in here.
Every month NAR publishes its Broker Trust Index Survey, and you can download the report as a PDF file. The first page of the monthly report has a table with lots of data, including:
Median days on the market (in the upper section “Market metrics”).
Average number of offers (in the “Other market indicators” section below).
Three columns show the data for the reporting month, the previous month and the 12 months before.
The publication of this data coincides with the monthly publication of NAR Existing home sales Report listing inventory and supply along with home price data.
These reports have two drawbacks: they are national and they are out of date. Each report appears more than three weeks after the end of the month. For example, the July 2021 reports were published on August 23.
Real estate agent.com Local market trends The page shows data for the counties and metropolitan areas, including the days on the market. But the information is still more than three weeks out of date and you need to learn about the shaky interface.
Avoid analytical paralysis
Buying a home is a scary experience, and it can be tempting to numb your discomfort by focusing on numbers. Don’t hesitate by dwelling on statistics excessively.
“If you’re trying to wait for the perfect time, you’ll have to wait forever,” said Rob Heck, director of origination at Morty, an online mortgage broker.
The housing market will continue to challenge buyers for a long time to come. Once you are determined to make a purchase you need to get out there and risk a refusal by making offers.