BAM’s Key Details:
- Days on market has increased by 45% year-over-year – most notably in pandemic hot spots
- More days on market means buyers have more time to consider their options
- Sellers can increase their odds of selling by attracting buyers
With homes spending more time on the market, sellers need to attract buyers by sweetening the deal.
It’s not quite a buyer’s market, but buyers do have considerably more negotiating power than earlier this year. Because of this, sellers have to adjust their expectations and make room for buyer incentives.
Time on market up 45% year over year
Nationwide, days on market has increased by 45% compared to a year ago–rising in 48 of the 50 largest markets. A full 46% of listings have stayed on the market for more than 60 days—10% more than last year.
Days on Zillow, which measures the median number of days a listing remains on the market, was 54 days as of the week of October 16th, up from 38 days for the same period a year ago. For context, the lowest-ever recorded number of days on market was 19 in early April.
At this rate, Days on Zillow will likely reach 68 days by the end of 2022—up 10 days from its value at the end of 2021.
Buyers are far less likely to compete for homes they can’t afford. And homeowners are less likely to list their homes when their current mortgage payment with a 3% mortgage rate is significantly lower than what they expect to pay for a comparable home in today’s market.
Growth of days on market exceeds seasonal norms
Some change in days on market is expected from the lowest point in spring to its highest points in the fall and winter. Days on Zillow—a measure of the median time a listing spends on the market before it goes pending—have a similar cycle. Mid-May sees the highest number of new listings hitting the market and more sales, both of which cool down with the transition to fall and winter.
And yet, October is the best month to buy a home. As Days on Zillow reaches its peak at the end of the year, buyers will have more options and more time to decide.
Recent increases in days on market are greater than the typical numbers expected at this time of year. In the month ending October 22, days on Zillow increased by seven days. In that same period in 2019, that increase was only three days. In 2018, the increase was five days.
Slowdowns in both supply and demand
With the slowdowns in supply and demand, the segment of housing inventory that includes listings on the market for seven days or fewer is down 42% compared to the same time last year.
Meanwhile, the segment of housing inventory that includes listings that have been on the market for at least 60 days jumped to 46% in mid-October.
With interest rates expected to remain high for the foreseeable future, this dynamic will likely continue. Many potential buyers have been priced out of the market, and housing experts don’t anticipate any relief for these buyers in the near future.
Pandemic hot spots seeing the biggest increases in days on market
Markets that were on fire during the pandemic are seeing the steepest increases in days to pending and Days on Zillow, which makes sense considering their increases in housing prices.
Competition is cooling across the board, but it’s cooling faster in some markets than others.
In Austin, for example, the typical home that went under contract in March spent just over a week (eight days) on the market before the seller accepted an offer. Now, though, the typical home in Austin spends 52 days on the market before it goes pending. This marks a six-week increase to a level not seen since December 2018.
Demand is still strong for some homes in more affordable markets
It’s important to point out that while the typical for-sale home is spending more time on the market, houses continue to move quickly in regions that remained affordable and didn’t see dramatic growth in housing prices experienced in more popular areas.
Major Midwest metro areas have seen little change in the time the typical home spends on the market. Western markets, on the other hand, have seen listings spending far more time on the market compared to a year ago.
For-sale homes in Milwaukee and New Orleans are spending less time on the market than a year ago. Yet homes in Seattle, Raleigh, and Salt Lake City are staying on the market three times longer than at the same time last year as of mid-October.
There are some less competitive markets, including some Midwest metros, where the typical days to pending is less than two weeks—in spite of the meteoric rise in total days on market for the typical U.S. home listing. This suggests that the housing market is still plenty competitive for a subset of homes in these areas.
Top takeaways for real estate agents
Remind your clients and community that today’s market gives buyers more time to shop around and find a home that fits their financial situation as well as their list of must-haves, so they can make the best decision for their household.
Homeowners thinking about selling their homes should expect it to stay on the market until Christmas—roughly two weeks longer than what sellers could expect last year.
It’s important to point out that even with these increases in days on market, the numbers are still well below pre-pandemic norms.
Help your sellers prepare for negotiation with potential buyers. Encourage them to be open-minded and make sure they know their bottom line number.
Share this data with your clients and community to become their go-to source of industry news and money-saving hacks. Show them the numbers with a big picture view, so they can see the context and recognize the advantages of the current market.
Because every market has its trade-offs.
Also, homes are still selling—faster in some areas than others. Help your clients understand what’s going on in their market so they can more clearly see their way forward.