How’s the market? Do days on market and other indicators matter during the Coronavirus lockdown?
In the old days, when we still did open houses, one of the first questions many visitors would ask is, “How long has this home been on the market?”
Days on Market as an indicator
Days on market has long been an indicator as to how well a listing is doing relative to other homes for sale in the marketplace. It will sometimes lead a homebuyer putting in a ’lowball offer’ if a buyer believes a listing is stale and it will sometimes lead a buyer putting in a ‘bully offer’ is the market is running hot.
For example, in February and March 2020, our median days on market for properties for sale on the Kitchener-Waterloo MLS was just 8 days. In April that increased to 14 days. (That’s still pretty short, but let’s see what May’s statistics show.) When most homes are selling within 8 days, a listing that has been on the market for 14 days is a little long. When most homes are selling in 14 days the a listing that has been on the market for 24 days is long. The statistic in itself is not as significant to a listing as it is in relation to the median statistic.
How much does days on market matter during Coronavirus lockdown?
Technically, we are now in what is normally prime buying and selling season. However, market activity is a fraction of what it typically is. How relevant is this statistic? How much does days on market matter during the lockdown?
Days on market is one of many indicators reflecting real estate market activity. Indicators are very good at revealing market sentiment. Indicators are very good at revealing how one listing is doing compared to the market as a whole. However indicators are not so good at showing specific details. For example, condo units typically tend to take longer to sell than single family homes. Small, low-priced single family homes tend to sell after fewer days than larger, high-priced single family homes. Average and median days on market statistics do not show that information. We need other indicators as well.
Other indicators include:
- Median Sales Price
- Average Sales Price
- New Listings
- Homes for Sale
- Months Supply
- List Price to Sales Price Ratio
So what are these indicators indicating?
|Median Days on Market||9||8||8||14|
|Average Days on Market||22||17||15||19|
|Median Sales Price||$540,000||$550,000||$545,000||$522,500|
|Average Sales Price||$561,603||$569,143||$583,913||$566,285|
|Homes for Sale||399||450||569||575|
|Median List Price to Sales Price Ratio||102.2||105||103.7||100|
|Average List Price to Sales Price Ratio||104.7||106.7||106.3||101|
Indications of a softer market
Clearly the number of sales is down in April. Coupled with the increasing months supply of homes available for sale indicate that the market is shifting from sellers to buyers.
For me, my ‘go to’ statistic is List Price to Sales Price ratio, which are trending down.
Also worth noting is that the median sales price has fallen. This may indicate that those higher-priced family homes are waiting in the wings for the Coronavirus lockdown to be lifted before being listed for sale.
Note: I am going to make this chart a regular part of my bi-weekly “How’s the Market” video series.
Coronavirus and it’s impact on Kitchener-Waterloo real estate
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