One of the most notable benchmarks for identifying the state of the housing market is the number of days a house is listed for sale before it is under contract; a.k.a., Days On Market (DOM).
Specifically, DOM relates to a single listing. When a seller uses more than one listing Total Days On Market (TDOM) reports the cumulative time (subject to certain regulations) a house has been for sale. With that said, DOM and TDOM is the same when one listing is used, and different when multiple listings are involved.
Once upon a time a TDOM of less than 6 months was associated with a seller’s market, and more than 6 months with a buyer’s market. It has been more than a decade since a “balanced market” was experienced prompting one to question whether the 6-month gauge will be rethought.
With all of that as background, back to the opening question – Is The Housing Market As Good As Reported? Certainly the TDOM is decreasing, but is the current TDOM correct? The answer is YES, but does it truly reflect what is transpiring in the market is another question. Here’s two reasons why.
The MLS service introduced a new listing status (Coming Soon) in the second half of 2019. Agents have informally used this language to introduce new listings for some time via yard signs, social media, etc., but it was not until 2019 that the MLS officially made this new optional status available.
In an Active status the DOM counter is running. It is not when Coming Soon. It is up to the client, with advice from their agent, to decide how to introduce the new listing. It is the “free” uncounted market exposure during the Coming Soon status that has the potential to understate the DOM.
Another change, which was introduced in early 2020, addressed the time a listing was under contract (off market) when calculating the DOM. Previously, the DOM included the period of time a listing was under contract if it went back on the market. Now, since the change, the DOM does not include the off market period. It is important to note that this new methodology was applied to listings going forward; i.e., history for previous listings was not updated.
As reference, the 86 properties in the $600s price range that were on the market in 2020 failed to close on 13 binding agreements during the most recent and previous efforts to sell.
Miller Group Realty
MGR is focused on a specific audience in order to bring greater value to clients. The specialization is the residential single family resales generally valued $600k+ in a portion of the Walton High School area. Awareness of these changes enhances ones ability to properly advise a client planning to buyer or sell.
Visit WaltonStats.com for further insight into this hyperlocal market.