Canadian real estate is always the topic du jour: daily media coverage closely tracks every fluctuation in hopes the data will divulge an imminent boom or bust. However, focusing only on the number of sales and average price tells just part of the story.
While it’s important to know how many homes are changing hands, and for how much, there’s another metric that provides valuable insight to the urgency – or lack of – in any given region: the number of days a listing remains on the market (DoM). Here’s why agents should ensure their clients have a firm grasp on this data point when determining their next market move.
An added layer of insight:
Delving into the DoM offers valuable insight to savvy buyers and sellers, helping them time the market, or hone offer strategy. It can shed light on why some neighbourhoods experience bidding wars as the overall market softens, or why one property remains untouched while its neighbours sell like hot cakes.
Like the sales-to-new-listings ratio, determining the aggregate DoM (calculated by adding up the active days for homes for sale, and dividing by the total number of listings) can gauge whether a market is balanced, or in buyers’ or sellers’ territory. This is clearly of huge benefit to sellers determining whether it’s the right time to list their property or measure the level of demand for their listing against local comparables.
Look to DoM for hot or not neighbourhoods:
This is especially helpful in local markets, where selling conditions can vary widely by neighbourhood. For example, check out how DoM differs across the City of Toronto housing market:
Lingering listings create stigma:
Assessing DoM is equally of importance for prospective buyers seeking an edge. Not only can it indicate the level of competition within specific neighbourhoods (typically, the shorter the DoM, the hotter the demand in that area), but it can potentially raise red flags for individual properties.
In particularly hot markets, properties that languish for an extended period of time can garner a stigma; this may suggest an inherent issue with the property, as it has been continuously overlooked. However, a longer DoM could also hint there’s a good deal to be made. The seller may be more open to price negotiations and accepting of financing or inspection conditions.
However, this also directly contributes to instances of multiple re-listings, as sellers would rather yank their listing, readjust pricing strategy and post under a fresh MLS number to seize a new opportunity to get in front of buyers. It’s especially important for agents to explain this phenomenon to their buyer clients, as properties that have been brought to market multiple times could also present a good opportunity.