Real estate statistics and claims can be more than a little confusing, especially when you are not a professional working in the industry. We are bombarded with sensational news headlines and market statistics presented by organizations and individuals who manipulate data to serve their own agendas. One of the most widely published and largely inaccurate statistics I see published EVERY. SINGLE. MONTH is the DOM (average days on the market) statistic. In the hot seller’s market, we experienced in the GTA over the last couple of years, it wasn’t much of an issue because homes were selling FAST! As we have moved into a more balanced market over the past several months, this DOM measure is once again becoming more important. So what is so flawed about it?
The Statistic Does Not Include Data From Homes Listed Multiple Times
According to TREB’s recently released Market Watch, the average days on the market for homes SOLD in March in the GTA was 20 days. Well that’s ok, right?! Nope! It’s completely untrue. The data used to calculate this average uses active listings SOLD during the month, but it does not consider that many of the properties SOLD, were listed multiple times.
Let me help you understand. Property A was listed January 4th, and because the owners of Property A were not that motivated or unwilling to accept that the market had slowed down a little, they decided that they would test a price – just to see what would happen. After three weeks on the market, and likely with some help from their agent, they decide that they should reduce to a more realistic price, BUT instead of processing a price reduction for their listing, they choose to completely cancel the listing and relist the house. The advantage of this strategy would be that once relisted, the days on the market as shown in the listing would again begin at zero. Why would we want this? Well, for anyone who hadn’t seen the original listing, it would seem to be a brand new listing!
“This quick fix re-list strategy solves this stigmatized property problem, for the most part.”
Why would we want to do this?! I blame Buyers! Prospective buyers unfairly stigmatize homes, based on how long they have been on the market. But it isn’t really the fault of Buyers, unfortunately, due to the speed at which our market has been moving over the last few years, Buyers tend to believe that just because a home has been on the market for a while, there must be something wrong with it, and so, homes listed for more than 20 days begin to carry a stigma. This quick fix re-list strategy solves the stigmatized property problem, for the most part. So you might be thinking who cares?! Nobody really cares and really it doesn’t matter, but unfortunately, it skews the market data.