What to believe?

By Shawn Lackie

I was recently reading a monthly report on a local internet news site about house prices in the Durham Region. It got me thinking. I read those as do thousands of others, but what are we really to believe?

The reason I ask is that I mentioned this before in a piece I called "Tell Your Numbers To Shut Up" in October. And it made me wonder. What DO people believe? Many real estate boards would have you believe what they say is the gospel truth. I think some couldn’t care less. They put it out there and you can believe or not. Up to you – whatever. The thing is, how is someone not familiar with deciphering data able to read actual numbers?

What do those numbers really mean? Well, here goes. Months of Inventory basically means how many months it would take to sell ALL of the current listings. So if you see 3.6, for example, that means it would take just over 3 and 1/2 months to sell all the listings currently up. That number would also be a clear indicator of just how hot or cold the current market is. The norm has mostly been (historically speaking) 3-4 months to clear inventory.

The craze in the pre-pandemic and pandemic market skewed numbers out of control. Homes were selling in days, weeks (hours?) for goofy prices in bidding wars. That event messed up conventional thinking based on long-term trends. Sellers were now expecting their homes to sell in hours, days, and weeks.

The Days on Market number is also one that has been played with over time. This is obviously exactly what it says. How many days was the house listed before it actually sold? Again, those numbers in a balanced market would be anywhere from 60-90 days.

In the pandemic mania, those numbers dropped to almost zero. Meaning, of course, we were in a seller’s market.

These days, those numbers are back to normal and, in many cases, longer than normal. That’s where the market gets confusing. It leaks into a buyer’s market again. And that seems to be what the boards are pushing. They want that. The good old FOMO. Gets things moving again. Except it’s not the norm. Most places these days sit for weeks before any action. In some specific instances, they would take less time, but we are definitely nowhere near what was happening 5 years ago. Thank goodness. Hopefully, for the buyer’s sake, we won’t get there any time soon.

One more thing. When you see that a home has been sold and it shows 36 days on the market, check whether this listing had been posted previously at a different price. Agents will often cancel a listing and re-list at a lower price so the listing is “Fresh”. If it is re-listed at a more reasonable price and sells soon, that is the stat that gets recorded. So the numbers can lie. You just need to read between the lines. It will help you make a qualified decision when it comes time to buy or sell.

Feel free to check out this story and more on my blog site at: https://slackie14.wixsite.com/buy-sell-and-more.