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I have graphed two marketing time indicators this week: Days on Market and Listing Discount. The two indicators track fairly closely, which is logical since one would expect the negotiability on price to increase as the time on the market increased.
Days on Market is defined as the average number of days that a property sits on the market from the last time the list price was changed (if at all) to contract date.
Listing Discount is defined as the percentage difference between the last list price and the contract price.
After a decline in both indicators over the past year, both have bumped up as of late. However, it's not clear whether this indicates a weaker spring market ahead. Over the past decade, these indicators were evenly split on whether they rose in the first quarter, even during the boom years. Listing discount has trended upward for the past two quarters and days on market in the past quarter. I've always seen this market indicator as a supplement to other indicators like price trends, inventory and sales levels. In light of the upheaval in the credit markets, and the national economy being either on the verge of or in a recession, I suspect we won't see much improvement in either indicator over the next several quarters.
· Listing Discount versus Days on Market [Miller Samuel]