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Days on Market: a measurement of how long it takes a property to sell, calculated from the day it’s listed for sale to the day an offer is accepted and conditions are waived.
In 2019, the average property listed with the Toronto Regional Real Estate Board (TRREB) was on the market for 20 days – in real estate lingo, we call that 20 DOM – days on the market.
What Impacts Days on Market?
How long it takes a property to sell is impacted by the following:
1 – The Time of Year
You’ll see from the chart below that the length of time it takes a property to sell is greatly impacted by the time of year. In 2019, it took on average, 16 days to sell in May and 27 days in December – nearly twice as long!
(I’m sharing 2019 stats because the 2020 DOM stats are impacted by COVID)
Days on Market in Toronto Real Estate
2 – How well a home ‘shows’
It might seem silly, but how long it takes a property to sell is impacted by how clean it is, whether or not it’s staged and how flexible the owner is in allowing potential Buyers to see it.
3 – How well a home is marketed
The more exposure a home gets, the more likely you are to find the right Buyer. More eyeballs = a faster sale (and more money too). Find out how the BREL team reaches more buyers here.
4 – How well a home is priced
Overpriced homes take longer to sell; underpriced homes fly off the shelf (and often get multiple offers). The Toronto real estate market is smart and Buyers teach Sellers about the price of their house, whether they intended to or not. If a home is on the market for longer than average, Buyers are saying: “Your price is too high”.
Here are a few scenarios that illustrate how the law of supply and demand works and how it affects how long it takes a property to sell.
Scenario #1: Multiple Offers
Here’s a scenario we often see when a house receives multiple offers:
- A house is priced at $799K and the Sellers set an ‘offer date’ in 7 days, in the hopes of getting multiple Buyers to make offers at the same time.
- The Seller receives 8 offers.
- One or two of those offers is usually below or at the asking price.
- One or two of the Buyers REALLY want the house and have offered a ton of money – over $900K.
- Everybody else usually ends up congregating around one or two numbers (usually the number that’s supported by the recent sales in the neighbourhood). For the sake of my example, let’s say 2 offers are at or around $850K and 2 offers are around $860K.
- The house sells for $925K.
Here’s what the market did: there was low supply and high demand. While most Buyers in this example felt the house was worth around $850K, the laws of the market drove that price higher and the Seller was lucky to find a Buyer who was willing to pay more. Good for the Seller, bad for the Buyers whose offers didn’t get accepted.
Scenario #2: The Overpriced Home
Here’s another common scenario:
- A house is listed for $969K
- A few days later, the Seller receives an offer for $930K and turns it down.
- Two weeks later they receive another offer – this time at $925K.
- A month later another offer is received at $935K.
If 3 Buyers are making offers around the same number, like it or not, that’s likely how much that house is worth. Sellers who are motivated to sell will listen to what the Buyers are saying and eventually accept a lower price, while some Sellers will decide to take their house off the market and wait for prices to increase.
Here’s what the market did: there was low demand for the house at $969K so Buyers refused to meet the Seller at their asking price. Only when the price is lowered to what the Buyers are prepared to pay, will this house sell.
What Are the Lessons for Buyers & Sellers?
- The faster a house sells, the higher the price. Homes that linger on the market send red signals to Buyers – what’s wrong with this home? Why doesn’t anybody want it? In a fast-paced market, a ‘long time’ could be 3 or 4 weeks. Sellers who overprice their homes don’t end up selling for more money – they’re just on the market longer.
- SELLERS: Price your home right from the start – and make sure you’re working with a brokerage who invests in the staging and marketing needed to sell your home FAST. You’ll feel it in your pocketbook.
- BUYERS: If you’re looking for a deal, look for a higher-than-average DOM – there’ll be room to negotiate.
Caveat: Toronto Days on Market Statistics Can Be Deceptive
Unfortunately, it’s common in Toronto for Sellers (and their agents) to finesse the number of days on market that appear on a listing so that a home doesn’t appear ‘stale’ or unpopular. It works like this:
- A property is listed for sale and doesn’t sell within the average time in the market (for example, 20 days in 2019)
- The listing is terminated from the MLS
- A new listing is created, showing Days on Market as zero
- When it sells, the Days on Market are calculated from the newest listing – and doesn’t reflect the initial time on market
If you’re interested in a property, make sure that your REALTOR researches past listings too – a house that appears newly listed might, in fact, have been lingering on the market for 6 months, and your ability to negotiate might be far greater than you think.