Measure Demand With Days on Market

Imagine you are in a grocery store and you arrive in the produce section. Surprisingly, there are no apples. Apples were on your list, so you are naturally disappointed and a little bit confused. But then you looked around and noticed other people are also shifting from foot to foot, glancing over at the empty shelf of apples. But wait! The produce manager is heading your way with a fresh box. Relief! The best apples are picked and only a few remain on the shelf after this influx of inventory.

Nationally, our housing market felt the same way for a few years. The best of the best inventory had contracts to purchase hours after hitting the market and the market time, also known as days on market, was minimal – an average of around a week in our area.

However, the supply of homes has grown. Using our analogy, no longer are there people waiting in the produce section for their apples. In fact, some apples need to be discarded because they are too old, have been available for too long, and are getting passed over for fresher produce. The same thing is happening with our housing inventory and days on market is growing.

Below is a graph illustrating how days on market has changed for the Pierce County Area:

There are several different ways to track supply and demand – sold prices, price per square foot, number of homes for sale, number of homes under contract, months of supply (absorption) and more. If inventory rises and demand contracts, generally days on market rises. But remember, you can still have inventory rise and days on market shrink if demand exceeds supply growth.

If you have questions or want specific information regarding the market in your neighborhood, I am just a phone call or a text away.