Inside San Francisco Real Estate

Welcome to “The REAL Days  On Market.”  Why are we writing this?  To solve a glaring problem.

Will the real days on market please stand up, please stand up, please stand up

The Problem: We Realtors and appraisers count on information in the multiple listing service (MLS).  We analyze all types of trends, such as sales prices, medians, averages, yada yada.  However, there is one metric that is particularly tough to count on in the current system.  That metric is Days on Market.  What is Days on Market?  Quite simply, it is the amount of time it takes from the date a property first hits the market to the time it sells.

Scenario 1: If 555 Main Street hits the market on January 1st, goes into contract on January 10th, goes into pending status January 20th, and closes on January 30th, here’s what MLS will tell you:

Days on Market for 555 Main Street:  20 days (yes, they are using the day it went into “pending” status)

My Gripe:  This does not show how hot the property actually was.  I think the day you have a ratified contract on the home is a better measure of how the market received it.  I’d put this number at 10 days on market.

Scenario 2: Let’s say that 555 Main Street had been on the market for 90 days prior to the January 1st listing date, with another brokerage trying to sell the home.  They were unable to sell it and the listing expired.  It was then listed on January 1st, went into contract on January 10th, went into pending status January 20th, and closed on January 30th.  What will MLS tell you?

Days on Market for 555 Main Street:  20 days

My Gripe:  They left out the previous days of marketing time!  Is this in some way insignificant?  Not in my opinion.  It should read 110 days, using their “pending” status date, or 100 days using my ‘moment it goes into contract’ status date.  This does not show how cold the property was.

Either way, the whole picture is not being told.  So we have a SOLUTION:

The Solution: We are going to study different neighborhoods, drilling down into each transaction and tallying up the true days on market for the sales.  We will report on these metrics:

• The average amount of time it takes for homes to go into contract (this is known as the “active-contingent” stage).
• Average days on market for the area, including time properties were marketed previously (this is a feature that MLS currently lacks).
• And MLS’s days on market count.

Once we do this for an entire neighborhood, we’ll have a better idea of the REAL days on market trends in specific areas.  If you have suggestions on how we can refine this method, please contact us.

We’ll begin reporting on neighborhoods as soon as we can build our first spreadsheet.  May the truth be known!