The “days on market” metric is one of the most overlooked, but important, pieces of data used to measure housing market conditions. Also called DOM, it’s exactly as it sounds — how many days a property has remained on the Toronto MLS before it sells. Particularly in Toronto, which has an extremely short DOM of often less than one month, it can be very useful to see how it changes over time.
What is DOM?
For example, Oakville real estate currently takes 29 days on market to sell, according to the latest report by the Toronto Real Estate Board. However, in November 2018 it took 34 days to sell. While an extra five days may not seem significant, it actually tells us the Oakville market has picked up significantly this year — and it did. Sales grew to 240 transactions from 189 and prices grew 3.5% to $1,061,347. So we can see that all these metrics support each other, but the DOM acts as a kind of shorthand we can usually rely on.
Similarly, Burlington homes for sale lasted 27 DOM this November, down from 35 DOM last year. With a seven-day decrease we’re likely to see even greater price growth — and we do. Prices jumped 6.8% to $818,177 and sales increased to 195 transactions from 168.
How can days on market be analyzed?
A longer DOM compared to last month or last year generally means the market has become less competitive and buyers are taking their time and having their pick of options. Conversely, a shorter DOM usually means that buyer competition has heated up and buyers may feel pressured to be more aggressive in their tactics — think bidding wars and a no-condition offer.
But note that DOM is calculated based on how many days a property is listed on the MLS before it is terminated or before a price changes — if a listing is taken off and then put on again the DOM starts anew. This is a very common strategy (see below) so that buyers don’t see a home languishing on the MLS, which can make it seem less desirable. The Toronto Real Estate Board is working to change this so that the metric shows the total amount of DOM from the day it hit the listing.
Either way, thanks to MLS information now being public, everyone can view how long a house has been on the market, along with all its terminations and price changes, which has changed the game considerably. With this info in hand, prospective buyers are now much more informed earlier in the house hunting process.
What does DOM mean for sellers?
Sellers should look closely at the DOM when they consider listing their home. What is the trend for DOM locally? If it’s going downward, sellers may consider waiting for the market to tighten, since competition will likely heat up, allowing them to set a higher price. Conversely, if DOM is going up it means that they may want to list now before more supply hits the market and it becomes harder to sell. Of course, it’s extremely hard to time since anything can happen, such as new government regulations, which can shake up a market considerably. But, you can use DOM to help support a decision.
You can also use the DOM strategically — many sellers list their home then terminate, then list again just so the DOM doesn’t look too long because it signals a weakness to buyers. Discuss this option with your real estate agent.
To reduce your DOM you should price your home correctly and consider staging it so it looks attractive to any potential buyers.
What does DOM mean for buyers?
Buyers will do well to also look at DOM to decide if this is a good time to take the plunge. They can also decide how they want to structure their offer based on a DOM. If a DOM is low and decreasing there’s likely much competition for the neighbourhood and similar properties and they may want to consider reducing the amount of conditions they include, or upping their price to the highest number they can afford. Or they may want to consider waiting altogether until the market calms down and they’re in a greater position of power.
If you see that a home has an especially high DOM compared to the average you can feel fairly confident that the sellers may be desperate and you have some room to negotiate (of course this could also indicate stubborn sellers!).
So next time you’re thinking of buying or selling a house don’t forget to check out the DOM for the particular property plus the region as a whole — it can give you a great insight into market conditions.
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