The Property Line: Watch for signs of a better market for buyers

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…