Thursday, January 24, 2008

Days on Market (DOM)

This post will explain why Days on Market (DOM) is not a great indicator of market trends. Bob Truman has mentioned this a few times on his widely viewed blog so I thought It would be worthwhile to dig a little deeper here.

From (what's new):
Jan 24
15% of the single family homes listed this month have already sold or conditionally sold. Average DOM was 11.

Jan 23
Homes are now starting to sell faster. Days on Market(DOM) last week was down to 48. It was as high as 62 during the last week of December.
By Jan 24 the days on market for properties listed and sold in the same month could not possible exceed 23. If they were all listed on Jan 1 and sold Jan 24 that would be 23 days on market. I would expect that this average would end up being half that as the listings and sales being distributed through the month. So average DOM of 11 is not very meaningful.

Without even looking at the stats I can say that all the homes listed in July that have sold in January have an average DOM of over 150.

Days on Market only includes properties that have SOLD. It does not include ones that remain on the market. If there is a a low level of sales and high inventory it is possible that the new listings are selling more often while the others sit.

Days on market can be reset by relisting on the MLS. Its no secret that this is occasionally done to make a listing appear fresh and increase the chance for a sale.

Also, consider the report from Comfree Edmonton.

Ave. Days on Market: 64

But looking at the unofficial stats from "leendart" posted on the bubble blog shows Active Average DOM on Dec - 29 to be 111. Also this number would be higher if data collection started earlier and becomes more accurate over time. See unofficial stats weekly and monthly.


JimM said...
This comment has been removed by the author.
JimM said...

DOM doesn't seem very realiable now as an overall indicator. There seems to be more than one way to manipulate this number on a listing, too. The real history and info is only a thin layer away. Don't think it fools very many buyers if they do some research.