While the Days on Market statistic isn’t a great reference for determining how long you might expect a particular property to take before it sells, it does give us insight into Calgary market trends in general.
When a listing on MLS expires or is terminated and then relisted, the DOM clock resets to zero. This can happen several times throughout the history of a listing or never at all. When the market is brisk the DOM stat is much more accurate because fewer homes are relisted. However when the market slows down, properties are relisted more often which really skews the stat.
What correlation is there between the DOM and prices? Between 2002-2006, it seems there was absolutely none. Prices remained steady, increasing at a gradual, sustained pace regardless of the DOM. But after 2006, when home buying became more “emotional” (for lack of a better term at the moment) the DOM and Price trend became closely associated.
The following graph starts at the end of 2005 for a closer view:
A look at how DOM compares with the Inventory Absorption rate. No surprise, the DOM rises as the absorption rate rises.
As is evidenced by the chart below, as inventory increases and sales decrease (resulting in an increase in the Inventory Absorption Rate) the price adjusts accordingly:
We’ll see how May plays out with regards to the DOM, Inventory Absorption and prices. In April, the SFH absorption rate edged up to 3.7 from 2.9 the previous month and the average price decreased $11k.