Is Days On Market an Accurate Measurement for the Tucson Real Estate Market?
I’ve been playing with some numbers, trying to get a real (or at least an accurate) picture of our local market conditions. Most notably, I’ve been looking at days on market and the sales price to list price ratio.
I’m hampered by the way our Tucson MLS system allows agents to access the information for Sold properties. Exporting the information is crude, at best, so I’d say the results I’m getting are in the ballpark, but probably not to-the-decimal perfect. I’ll keep futzing with it, to see if I can get real numbers for a broader area, and more accurate figures.
If you follow the market statistics put out by the MLS system, it calculates a straight average days on market for sold listings, but doesn’t consider any previous times that house was listed. For example:
If 123 Elm Street was for sale by Agent X for 70 days, and then by Agent Y for 90 days, and then by Agent Z for 45 days before it finally sold, our MLS system would consider that 45 days on market (DOM), instead of the cumulative figure of 205 days on market (CDOM).
I want to know what the cumulative days on market (CDOM) is for the various parts of town.
For starters, I considered every single family home sold in Central Tucson since January 1, 2006. Ideally, I’ll break that into quarterly figures, but for now, we’ll just average everything since 2006.
Result: Average Cumulative Days on Market from 1/1/06 to now: 95 days.
Days on Market as calculated by MLS during the same period: 47 days.
I also calculated the sales price to list price ratio, using the original listing price of the original listing. When MLS calculates this figure, they consider only the last list price, and not the original list price. For example:
If Agent Q lists a house for $350,000, then reduces the price to $325,000, and again to $320,000, and the house sells for $300,000, then we calculate: $300,000 / $320,000 = 93.75%. The house sold for about 94% of the List price. If we look at the original list price, then the house sold for 85.7% of list price.
Result: Considering the original price from the first listing, houses go for 80% of Listed price.
Considering only the most recent list price, houses go for 97% of List price.
I need more analysis before I can draw any real conclusions. I have a good idea of what is going on, but I like to see numbers to back up my ideas. Here’s a couple thoughts:
- Agents have been withdrawing and relisting properties to “reset” the DOM for a very long time in Tucson, it’s an acceptable practice in the area. If the percentage of listings withdrawn and relisted has stayed fairly constant over the years, does that make the MLS reported DOM a better index of the state of the market?
- If the proportion of listings being withdrawn and relisted has increased (and I believe that it has), then calculating CDOM per quarter back through several years should show a large increase in CDOM over the past 16 months or so.
- Are Sellers overpricing their homes more rampantly than in any other time, at least proportionately? I’d need to calculate the sales to list price ratio for several years back and watch for trends.
- I’m curious if days on market or sale to list price ratio changes for different price brackets or areas of town. I’m also curious how days on market varies per price bracket and area of town.
- If a property truly sells in 30, 60, or 90 days, what is the actual ratio of sales price to original listing price? I’d assume that the faster it sells, the closer it goes to the list price.
- What’s the average price reduction, and when does it occur?
You can tell I’ve got more questions than answers, and am frustrated by the restrictive data available to me. Hopefully, we’ll get some interesting answers in the weeks to come. I’ll let you know what I learn.
