One can often tell how hot or cold a real estate market is by how long it takes a typical home to sell. When homes are selling within a few weeks of hitting the market, things are pretty hot. Conversely, when homes sit on the shelf for a while, the market is cold. The duration of time a home is on the market is known as “marketing time”, “days on market”, or “DOM” for short.
In any given U.S. market, marketing times averaging less than 30 days signal a red hot market where properties are selling like hot cakes. Average marketing times between 31 and 59 days signal a strong market. When marketing times are between 60 and 180 days, the market is believed to be in balance.
Remember when homes were selling like hotcakes?
Once average marketing times surpass 180 days, however, things are looking grim and signal a weakening of the market in question.
How do we know these cutoffs are reliable indicators of market conditions? Well, we didn’t just make these numbers up– they’re actually what the banks have set forth as their guidelines. Matter of fact, average marketing times are printed right there in the appraisal report, which the lender scrutinizes carefully (especially these days).
Appraisal report snipit (click to enlarge)
Now that we’ve discussed marketing times and what a hot market, a market in balance, and a cold market look like, how would you like to see some trends in San Francisco? Well that’s just what we’ve done. We plotted average and median marketing times for all property types in the City and looked at the trends over a 14-year history. Here’s the chart:
