The Spider And The Fly: Don’t Lie About Days On Market

January 29, 2025
  • DOM Using The Last Price Change Is Far More Useful Than Using The Original Date
  • DOM Is A More Powerful Metric When Used With Price Or Supply
  • DOM Usually Measures An Accurately Priced Listing

In all my published research, I strive to measure Days on Market (DOM) as the number of days between the last price change and the contract date. More than twenty years ago, a Dow Jones Newswire reporter got under my skin, lecturing me that I should be measuring DOM from the original listing date. The reason for my irritation? While her suggestion can tell us how disconnected a seller is from reality, the listing hasn’t been tested in the market yet. A $500K house asking $1M can sit for years until the price is cut, so what does that tell us? Days on the market should be used to inform market participants how long it should take for an adequately priced listing to sell in the current market. In my view, the last price cut, if any, before a home goes under contract is the moment the listing specifically enters the market.

The following chart tracks DOM against actual supply in Manhattan. Listing inventory and DOM seemed to follow each other until about 2021 as listing inventory continued to move sideways, but DOM reset to a lower level and stayed there. Why?

I contend that the collapse of DOM in 2021 reflected the demand frenzy that was initiated by interest rates falling to the floor and staying there. Manhattan was delayed by about 9 months by being perceived as the global hotspot of the pandemic. I was getting a lot of emails during that period from appraiser colleagues asking if I was ok.

Until vaccines were introduced to Manhattan in early 2021, housing markets were booming all around us, and, in fact, the entire U.S. housing market was booming but Manhattan. By the second half of 2021, we began booming, too, and DOM plummeted even though listing inventory remained stable (supply was rising, but sales were offsetting the increase).

The fact that DOM continues to remain lower, relative to inventory, tells me that demand was interrupted by the Fed’s pivot to higher interest rates in 2022 and has not been satiated. In other words, any significant downward slide in mortgage rates will probably result in an overreaction in Manhattan sales.

Such a pattern would indicate pent-up demand in any housing market, I would think.

DOM Can Mislead Seller Weakness

In Manhattan, when a current listing sits on the market for 80 days, that’s the beginning of the time to start thinking about reviewing the asking price. Many buyers see this as a clear sign of seller weakness. But as my analytical friend and real estate broker, Julia Boland, told me: “I find buyers get fixed on a number not realizing that average DOM changes and the motivation of each seller is not uniform.”

DOM Stats Reflect Successful Sales In A Given Period

How I report DOM – it reflects a sale that was closed in the reported period and was, therefore, successful. Of course, anyone can calculate DOM before it closes since the last list price change date and the contract date, but no one except the listing agent and possibly a few close colleagues has the actual price. The trick is to understand whether the asking price is reasonable. A high DOM for the subject property relative to the local submarket might be a good way to get a sense of that.

DOM Can Give A Sense Of What The Sales Price Was

If a listing reportedly went to contract in a much shorter time frame than the current average DOM suggests, then it infers that the price was at or close to the list price. We use this method when appraising properties in our practice. In a situation where we don’t have the contract price itself, but in a period with an 80 DOM, we see a contract signed in 12 days suggests a full-priced offer was made.

Hiding DOM Stats Is Wrong

Back during the pandemic, I experimented with writing a column for Forbes but quickly lost interest. I wrote about a particular topic that concerned hiding DOM, and to say I was irritated was an understatement. During COVID, the Manhattan sales market stalled, and sellers were whining to their listing agents that their DOM was unfairly high. NYRAC, then a startup residential trade group, pushed REBNY and Streeteasy to hide DOM from their listings. I was very vocal against the manipulation of public-facing data. As much as I love what NYRAC stands for and the people in it, this was a bridge too far. The part that got me most upset about this situation was that all sellers were in the same boat, and it was easily explainable. Everyone had much longer DOMs during this period, and most importantly, no one was thinking about the lack of transparency to the buyers!

Another potential abuse would be at the time a listing is switched to a new listing agent if the prior history is ignored by pretending the listing is brand new. Not only does it damage the new listing agent’s reputation, but it also assumes that everyone else doesn’t see the manipulation that is being performed.

Early Career Thoughts On DOM

I started first blogging about housing in the summer of 2005. Here are a few thoughts made early in my blogging efforts.

Final Thoughts

DOM is a helpful tool for understanding how long accurately priced listings take to sell. Some markets are inherently slower or faster than others. DOM can be leveraged with other metrics like pricing and listing inventory. It is not a magic number and can easily be manipulated. Still, it is valid as long as the person relying on the stat understands that it represents the average successful sale – in other words, the listing price needs to put the property “in the market.”

Don’t tell lies: A Spider and The Fly comparison definitely applies to DOM.

Voice of Appraisal: The Boogeyman and John Russell!

“Phil and Kevin are back with a powerful interview with appraiser advocate John Russell! Mr. Russell covers President Trump’s executive orders, Data Cancer, the possible return of Dr. Mark Calabria, and the need for scapegoats from the GSEs!“

Click on the image to play the interview.

Did you miss the previous Housing Notes?

January 27, 2025

DC Housing Is Not For U.S., By George

Image: Grok

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