How long does it take to sell a home in SF?February 4, 2009
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.
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).
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:
- We all knew it already, but this chart shows things cooling in the last couple years, which means more bad news for sellers and more good news for buyers. The longer a home has been on the market, the more room a buyer should have to negotiate (not always, but typically).
- The high amount of sales activity in 2004 and 2005 can clearly be seen, as it took homes less time to sell back in those days. Free flowing cash was abundant and you can see the impact it had on the market.
- The year 2000 was the hottest market San Francisco has experienced in recent memory.
- The fact that marketing times remain below 90 days on average, even at their worst, is a sign that San Francisco’s market is healthier than most. For example, when I lived in Atlanta, it was very common to see average marketing times hovering around 180 days.
- There is of course a caveat to trusting Days on Market in our local MLS system (which is where this data comes from). If you’d like to read about it, click HERE, as we’ve written about it before. The important thing with the data above is that it is all subject to the same shortcomings and thus is useful in relation to itself (hope that makes sense). Furthermore, if you read that old article, you’ll see that MLS’s way of computing DOM can skew numbers both higher than they should be as well as lower than they should be. One could surmise that these two tendencies balance each other out (somewhat).
For more analysis on the San Francisco market as a whole, click HERE.
Posted in Home Buying, Home Selling, Macro-Level Info, Nerdy RE Analysis, Tips | Tagged analysis, days on market, dom, history, marketing times, san francisco, san francisco real estate, Tips, trends |