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Reading a Local Housing Market: Comps, DOM, and Inventory

Reading a Local Housing Market: Comps, DOM, and Inventory
Educational content only. This article is for general informational purposes and does not constitute financial, tax, or legal advice. Results and strategies may vary based on individual circumstances. Consult a qualified professional before making financial decisions.

The same listing in two different zip codes can mean entirely different things. A house sitting 60 days on market is desperate in one neighborhood and normal in another. Before you make an offer, learn how to read the local market's temperature — a 15-minute exercise that protects you from over- or under-paying.

Comparable Sales (Comps)

A comp is a recently-sold home (within the last 3–6 months) that's similar to the one you're looking at: similar neighborhood, square footage within ~15%, similar bed/bath count, similar condition. You want 3–5 comps to anchor your sense of fair value.

Active listings tell you what sellers are *asking* — irrelevant to value. Sold prices tell you what buyers actually *paid* — that's the real data.

Days on Market (DOM)

DOM RangeWhat It SuggestsBuyer Strategy
< 7 daysHot market, multiple offers likelyBe ready to offer over asking
7–21 daysHealthy demandReasonable offer near asking
21–45 daysCooling or overpricedOffer 3–5% under asking
45–90 daysStale; something's wrongInvestigate, offer well below
90+ daysMajor issue or deeply overpricedMake a low-ball; seller is motivated

Months of Inventory

Months of inventory = (current active listings) ÷ (homes sold per month). It's the single best market-temperature metric.

Hyperlocal beats citywide
City-level metrics hide neighborhood-level realities. The same metro can have neighborhoods at 1.5 months inventory and others at 8 months at the same time. Always pull the metric for the specific zip code or school district, not the whole city.
  • Under 3 months = seller's market (expect bidding wars)
  • 3–6 months = balanced market (some negotiation room)
  • Over 6 months = buyer's market (you have leverage)

Price-to-List Ratios

Recently-sold homes' final price divided by their original list price tells you whether buyers are paying over, under, or at asking. Ratios above 100% mean bidding wars are the norm; below 95% means sellers are accepting big haircuts. Your agent can pull this for any neighborhood in a few clicks.

Takeaway

Comps, DOM, and inventory — three numbers, fifteen minutes, and you'll know whether to lead with an aggressive offer or sit back and wait for a price drop.

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