Mar. 28, 2009 - Home Prices "Bottom" - Days on Market

Back on February 7, 2009 I said "We're at Bottom...the market is shifting".  I was talking about the properties that were going into escrow at that time, which are now reflected via closed sold prices.  But prices alone do not create an environment of "bottom". This is the first in a series of posts that will attempt to explain the total indicators of a shifting market.

In this first post we are going to look at Days on Market and the relationship this factor plays in predicting trends in home prices.

The market peaked as to prices when Days on Market were at their lowest point at 16-25 days on market during and just slightly past the 2nd quarter of 2007.  In other words, the lowest point in the graph above would equal the highest point in prices.

While we continue to have seasonal ups and downs with regard to Days on Market, what I was seeing at the time of my "We're at Bottom" post, was an abnormal dip in prices.  We now see, in hindsight, that the "event" was created by sharp increase in Days on Market followed by a dramatic SHIFT to abnormally low days on market. The market shift went to a high of 85 days in early 2009 to a lower point of 36 days on market for sales that went pending since 3/1/09. The current 36 median days on market is not as relevant to the bottom call, as the period immediately preceding it.

If it were a continuing trend downward vs. a "bottom point", the days on market would not have shifted dramatically back into position.  So while what we are experiencing now might be a "Spring Bounce" number consistent with numbers from last year, the bottom period was not a "normal" pre-Spring Bounce period.

I will continue to break down the individual aspects of the market shift, and identify the particulars of the data set in the final wrap up post. Subsequent posts will identify the relationship of Days on Market, Volume, Propensity of a property to sell within the first 30 days of being listed and the relationship between asking prices and sold prices...all of which affect prices going up and down.

Mar. 29, 2009 - RE: Home Prices "Bottom" - Days on Market

Interesting and thoughtful analysis of one aspect of market activity.  I will be interested to see your additional ideas about market trends.  It would be helpful to know what geographic regions are represented in your sample since local ares can show a lot of variation.

Mar. 29, 2009 - RE: Home Prices "Bottom" - Days on Market

In order to eliminate variances for hugely different areas and property, I used Eastside zip codes of:

9804,98005,98007,98008,98033,98034,98052 combined.

I used square footage up to 3,000sf and I excluded properties with lake and/or mountain views..