Syracuse.com:
Today’s housing market is hostile to home buyers because not enough homes are for sale. Would-be buyers find themselves in bidding wars and competing against cash offers.
Someday the path to homeownership will be less arduous. Here are signs that will help you detect when the homebuying process is becoming less intimidating:
When homes receive fewer offers
Competition among buyers intensified this year. Homes sold in July 2020 received an average of 2.9 offers each; in July 2021, they received 4.5 offers on average, according to the National Association of Realtors.
Those are just averages. Plenty of homes receive double-digit numbers of offers.
When the market cools and conditions are kinder to buyers, “you won’t see multiple offers of 15 or 20, you might have just one or two other offers, or you’ll be the only one,” says Selma Hepp, deputy chief economist for CoreLogic, a property information and analytics provider.
When homes stay on the market longer
Of homes sold in July, half had been on the market for 17 days or fewer, according to NAR. This metric, called “days on market,” is an indicator of the level of competition, and 17 days is a sign of a competitive market. By comparison, 2019′s median days on market was 59.5. Quick sales imply many competitors, and slower sales signal fewer competitors.
“If things are staying on the market a little longer, versus staying for a couple of days, then it might be time for [buyers] to get back in the market,” says Terri Robinson, a real estate agent with Re/Max Distinctive in Ashburn, Virginia.
Robinson cautions that she’s talking about median days on market for neighborhoods, cities and metro areas. She’s not referring to individual properties. One particular home might stay on the market for a long time because the seller is asking too much. That would be a sign of a faulty selling strategy, not of a cooling market.
When inventory and supply go up
In real estate lingo, “inventory” refers to the number of homes for sale as well as pending sales, and “supply” is the number of months it would take to sell all of the homes on the market at the current month’s pace. Inventory and supply have been low in 2021, a sign that sellers have a pricing and negotiating advantage.
When the inventory and supply numbers rise, it’s good news for home buyers. “That’s certainly an indicator that you will have less competition because there are more homes for people to choose from,” Hepp says. She adds that greater inventory means you can expect fewer bids over the asking price, too.
What a good agent can tell you
These indicators — average number of offers, median days on market and inventory — are national, not local, numbers. They’re broadly suggestive. But depending on national data alone is like peering at a map of the United States to navigate from your house to the grocery store.
The most useful real estate information is local and tends to be communicated person to person. It can be downright gossipy: how long this house has been on the market, how many offers that just-sold house got.
“The easiest way for a person to get that kind of information is to talk to their local real estate agent and ask those questions,” Robinson says. An agent can tell you when a surge of listings hits your target neighborhood, how many offers homes are getting and whether they’re staying on the market longer.
An agent can give you the scoop on less quantifiable information, too. Robinson says that in her area, outside of Washington, D.C., buyers were frequently waiving inspections earlier this year to make their offers more competitive. She knows an inspector who, responding to a need, “created a walk-and-talk, which was an abbreviated home inspection that could be done while someone was looking at a property.”
Recently, the inspector tells her that the demand for walk-and-talks has gone away, and buyers are back to getting full-fledged inspections that take a few hours. “It indicates that sellers are more amenable now to a buyer coming in and asking for a home inspection, so that’s good news for buyers,” Robinson says.
That’s the kind of juicy, useful anecdote you get when you develop a rapport with an agent who has plenty of contacts.
To supplement talking with an agent, Hepp recommends signing up for emails from a real estate brokerage. You get notifications of new listings. Just as important, Hepp says, you get updates on price reductions. “As soon as you see those, you will know that the market is not as competitive as it was,” she says.
Where you can look for data on your own
Maybe subjective information isn’t good enough for you, and you want confirmation of what you’re hearing from real estate agents. That’s where objective data fits in.
Every month, NAR releases its Realtors Confidence Index survey, and you can download the report as a PDF file. The monthly report’s first page has a table bearing loads of data, including:
- Median days on market (in the top section, “Key Market Indicators”).
- Average number of offers (in the bottom section, “Other Market Indicators”).
Three columns show the data from the report’s month, the previous month and 12 months earlier.
The release of that data coincides with NAR’s monthly Existing Home Sales report, which lists inventory and supply, along with data about home prices.
These reports have two drawbacks: They’re national and they’re dated. Each report comes out more than three weeks after the end of the month. For example, the July 2021 reports were released Aug. 23.
Realtor.com’s Local Market Trends page shows county and metro-area data, including days on market. But the information is still more than three weeks out of date, and you have to learn the wonky interface.
Avoid analysis paralysis
Shopping for a home is an anxiety-inducing experience, and it can be tempting to numb your unease by focusing on numbers. Don’t procrastinate by dwelling excessively on statistics.
“If you’re trying to wait for the perfect time, I feel like you’re going to sit and wait forever,” says Rob Heck, head of origination for Morty, an online mortgage broker.
The housing market will challenge buyers for a long time. If you’re determined to buy, you’ll have to put yourself out there and risk rejection by making offers.
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