Well, it depends on a lot of factors. Like where you’re investing.
There’s a really good site called Housing Tracker that tracks the inventory and median home price for major cities. It has a pretty simple interface and its a great resource.
Looking at Los Angeles I saw the inventory is up 50% from 9 months ago, Orange County, CA is up 100% from 9 months ago, Boise, Miami and Tampa are up a whopping 115-120% up in the same time period. Even places like Oklahoma city are up 25%!!! Dallas and Houston are up roughly 15%.
This basically means there’s a build-up of homes for sale. The number of buyers is decreasing or the number of sellers is increasing. Usually means either the market is stalling the the builders are overbuilding. Having the “Days On Market” data would definitely be a plus here.
Of course cities like Raliegh, NC have had a drop in inventory over the past 9 months by 0.8%. Austin is -10% but what really pleases me is that Salt Lake City is down -21%. It built up over winter [which is quite common] but come summer when the housing sales are the highest, its dropped 20%! This is despite all the building activity thats going on in SLC. Definitely a good sign.
So I’d feel comfortable investing in places like Salt Lake City, where I know that people are moving in from other western states and the housing supply is dropping. Although going by what happened in Phoenix, it might become more difficult to rent out the homes. But you stand a better chance of making money than if you buy in a place where the inventory has already built up a lot.
Of course there are other factors in buying real estate. Check out this post on Understanding Real Estate Cycles.