“Days on Market” Metric is Often Misleading

 The number of Days on Market (DOM) is frequently used to determine whether a market is running hot or cold.  Not a good idea!  The average Days on Market only includes those homes that sell – and sales are off substantially.  If it included all the homes on the market, DOM would be increasing dramatically.

 

The number often moves in a counter-intuitive direction, too.  Currently, for example, the number of Days on Market is dropping as the market is now cooling.  Just about the only homes that are selling currently are the so-called “pick-of-the-litter” homes.  They will always sell quickly, if priced well, in any market.   

When the market begins to heat up, the average Days on Market often increases.  That’s because homes that had been sitting for many days will sell as demand increases.

 

A much better housing market indicator is Months of Inventory.  That number is derived by dividing the number of homes on the market at the end of the month by the number of homes that have sold.  You can see these numbers on our website on our “Market Trends” page (JeffAndSteve.com).  The Months of Inventory is increasing sharply!

 

If you read or hear about things looking up for sellers, because the number of Days on Market is declining, forget about it.  It is clearly now a “Buyer’s Market” for homes in our area .

 

Steve TenBroeck