Have you noticed an all-too-familiar property popping up on the real estate websites as a “New Listing”? Sometimes the main photo has been switched, so you’re curious if this is truly the same old, tired house, or maybe something fresh on the market. It says 1 day on the market. Hmmm, you think, let’s call our realtor and book a viewing.
Disappointment soon sets in when you scroll through the photos. It is the same old doghouse.
You may ask yourself – and quite rightly – why do they do this? The facile strategy on the part of the seller and seller’s agent is to try to fool the market by changing the days on the market statistic that is prominently featured on most of the real estate online portals. Confused perhaps, but it’s not the buyers who are fooled by the ploy.
A further elaboration of this marketing wizardry is to re-list as “new to market” every time there is a price reduction. Rubbish.
Getting to the truth
On many of the real estate websites – Zillow, for instance – the consumer can scroll down through the promotional blurb to the section titled Price and Tax History, and it will give you the real history of the listing. If you can’t find that then ask your agent to send you the property archive.
So, while we can see that some market participants consider Days on the Market (DOM) as a tool for duping buyers, there is in fact a serious purpose for this statistic. Buyers and their agents (and, for that matter, other sellers in the same market) want to know how long a house has been for sale. It’s an important piece of information. To be fair, it is understandable that the seller of a particular property may feel vulnerable and even become defensive as the DOMs inexorably mount.
But, in fact, the vulnerability and the defensiveness are misguided.
Behind the veil
The number of days on the market by itself in fact tells us very little other than how long since the property was launched on MLS (assuming that nobody has been trying to goose the system). What one really wants to know is how long has a property been on the market since something of significance happened to the listing.
The three major milestones for a house that is on the market are: (1) launch day on MLS; (2) if and when it went into contract and then fell out; and (3) most critically, when it had its last price adjustment.
Therefore, one of the crucial statistics we track (and there doesn’t seem to be anyone else doing so since we last checked) is DOMSLPC. Days on the Market Since Last Price Change is quite a mouthful, but also a discerning way to gauge the pace of the market.
In effect we are measuring how many days after a property came on the market – or came back on the market or adjusted its price – did it go into contract. We amalgamate the numbers into an average to take the pulse of the market.
How it helps sellers
And while we measure it for the breadth of the River Oaks market, we also slice the market into significant price ranges. When we are reporting to clients who are sellers, we may further slice the market into a very specific range that relates directly to the property we are selling. In any one 12-month period the numbers can vary enormously.
For example, in the River Oaks market priced higher than $4 million the range has recently been from more than 160 days to as few as six days (the latter being in the second quarter of 2023).
The range of DOMSLPC tends to be tighter as the price point declines. But, fascinatingly, in moments of economic uncertainty, the middle price range, $2 to $4 million, shows the biggest climb in DOMSLPC. Why? Because it’s buyers and sellers in that price range who work for a living – often both partners work – and who worry the most about financial prospects of the economy. And who, we should add, have the wherewithal to choose their next steps in residential real estate.
So, if Days on the Market Since Last Price Change for your price range in River Oaks is, say, 24 days, and 30 days have passed since you launched on MLS, it is a clear indication that you are priced out of the market and that it’s time to adjust your price.
And, while there are always some exceptions and outliers (far fewer than one would imagine), even in a relatively thin market with limited inventory, the numbers don’t lie.