1. Days On The Market And New Builds
I have found that watching the inventory levels, number of days on the market, year-over-year price appreciation and overall new builds are a great way to determine the health of the market and if that market is heating up. It is crucial to be in the know, whether buying or selling.

2. Pricing History And Absorption
Pricing history, available inventory and absorption are the key indicators a market is heating up. Being aware of these telltale signs is crucial to understanding what cycle your market is in. As a professional, knowing where your market is in the cycle is very important in properly advising buyers and sellers of the potential risks and rewards to buying and selling at that particular time.

3. Inventory Levels
One way to tell when a real estate market is heating up is by monitoring the inventory levels. Oftentimes, low inventory of houses for sale will indicate that housing prices could increase soon. Low inventory indicates high buyer demand, which usually pushes prices up.

4. Supply And Demand
For investment sales, we take an in-depth look at the supply and demand fundamentals of the market and, more specifically, capture rates and year-over-year rental rate growth coupled with the amount of new supply being delivered. It’s critical to have your pulse on the most important market drivers to ensure assets are properly positioned or being repositioned to stay competitive.

5. Sales And Price Changes
In markets where we participate, I set up online alerts to notify me of sales and price changes. From there, I monitor homes and condos that list or sell, paying specific attention to the pricing and time on market. The key sign for me is a downward one. It is preceded by price drops in the market for people searching for a floor to the pricing. Multiple price drops across a market indicate a cooling or correcting market.

6. Limited Inventory And Higher Prices
A key sign is when home prices are increasing and the available inventory is becoming more limited. Increasing home prices and days on market are both good indicators to watch and determine if the market is heating up.

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Awni and Chantell Abbas
Awntel Property Advisors