One of the ways I can tell how educated a buyer is about home buying is by the questions they ask. One I get a lot at open houses is ” How many days has this been on market?”
Is it a valid measure of anything? Carol Lloyd, in the Chronicle’s “Surreal Estate” column, has a lot to say this week about it, noting that many agents re-list properties under new listing numbers, which changes the days on market to zero. She compares it re-selling "stale fish" and to re-setting the odometer on a car to enhance value. Big disagreement there: setting an odometer back hides information about wear and tear on a car, which is a really big deal. Wear and tear on a house because it was re-listed is negligible.
She makes some excellent points, though. the most important of which is that potential buyers have the right to know, and should know, how long a home has REALLY been on market. Lots of the bubble bloggers have been writing about this for a long time. But stale fish? I think it's a red herring.
It’s a good piece of data - you should absolutely know about it. But it’s not as simple as it seems. Here are the three things that are most critical for you to understand, as I see it.
- The history of a property is readily available to any Realtor with access to Marin County MLS data. If the property has been on market five times in the last five years, they can find out - it’s literally as simple as clicking a button. If’ it’s been on five times in the past year, that’s there too. Just ask.
- Days on market data is irrelevant without looking at pricing data too. That’s in the history also. Usually, when a home has been on market for a long time, it started at a higher price. As days on market increases, price usually decreases. If it doesn’t, then you’re dealing with one stubborn seller!
- Days on market is important, but it changes all of the time - it’s been going up in Marin County for over a year, and it changes dramatically by segment. Look at the average days on market for the market segment you’re interested in, i.e. “Novato homes, $1.1-$1.4 Million”, or “Belvedere-TIburon Homes, $2MM-$3MM”.
Finally, remember this is just one piece of information to look at when buying a home. Without looking at it the context of the comps, all of the other neighborhood information, etc, it's just one more piece of information.
What do you think?
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