What Is Days On Market?
Days on market provides a measure of the age of a real estate listing. The statistic is calculated as the number of days a listing is active before an offer is accepted or the listing is taken off the market.
Real estate agents, homebuyers, and economists turn to a number of statistics to help them understand the dynamics of the real estate market. Days on market is one of the most watched.
The figure helps real estate agents do their job by providing information at a few key points in the selling process. Early in the process, before a home is listed, days on market can help agents gauge the strength of the local housing market. By looking at the days on market of similar homes, agents can give sellers an estimate of how long it will take to find a buyer. This can help the agent and seller make better pricing and marketing decisions.
LUKE’S TIP:
Once listed, days on market can help the agent assess how her listing is perceived relative to others on the market. If days on market exceeds that of other listings, the agent may need to consider a new strategy.
Days on market also informs homebuyers by helping them evaluate the desirability of a home. Large days on market are viewed negatively in the real estate industry as a sign that the listing has become stale or is deficient in some way. If you see a large days on market as a homebuyer, it may be a sign that:
- the home is overpriced
- the market is cooling
- the seller is willing to be patient
- the home is not ready for showings
For economists, days on market is an indicator of the overall health of the housing sector. When days on market increases over a region, it is likely a sign that the market is slowing down. If it decreases, the market may be speeding up. Days on market for a region is calculated by summing the days on market for each individual listing then dividing by the total number of listings.
The period between 2010 and 2018 was marked by falling days on market, as the economy recovered from the 2007/2008 crisis. In June, 2018 the real estate listings portal, Realtor.com, reported that homes were selling on average in 54 days, a record low for the website, due to low supply in major U.S. housing markets.
The same report found that several markets had days on market of less than 30 days, including:
- San Jose-Santa Clara, California
- Seattle-Tacoma, Washington
- San Francisco – Oakland, California
- Omaha-Council Bluffs, Nebraska
- Salt Lake City, Utah
- Colorado Springs, Colorado
Like all statistics, days on market is susceptible to manipulation. Some agents and sellers seek to “refresh” their listing by taking it off the MLS for a short period, taking new or slightly different photographs, then placing it back on the MLS as a new listing. This serves to reset days on market because the statistic is not cumulative.
For more, check out How the Real Estate Industry Works or What Is FTP in Real Estate?
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