I guess it depends on how big an area you're discussing. 7 homes for sale on one block...not good. 7 homes for sale in one subdivision...these days that's awesome. If you send me the address of the home you're looking at, I can check value trends in the area and get you much more specific info.
You can email me at email@example.com or call me at 708-597-8884. Neil Coleman
It's not necessarily a bad thing. There are other factors that are more important than how many homes are on sale. For example, how many townhomes in the complex are in default or in foreclosure? If there are too many homeowners in the subdivision behind in paying there association dues, you may have a problem with obtaining a loan and you take a risk of higher association dues to compensate for those who are not paying. If you are working with an agent, have him/her look into everything before making your final decision. Good luck with your search.