Many brokers we talk with are worried right now because they see their listings sitting on the market. If this is happening to your listings it’s probably got you, and your sellers, a little nervous and you want to know what’s going on. It this a trend? Is it an anomaly? Is it just seasonal?
Based on the research we’ve conducted for the last two years, the DOM increase we’re seeing right now is probably just seasonal. We looked at the home sales between 4th Quarter 2015 and 3rd Quarter 2017 for the six county Denver Metro. Specifically, we looked at the percentage of homes that needed a price reduction before they were sold.
As you can see with the below chart, more homes need price reductions during the summer months. On average, 27% of homes needed a reduction before selling. However, in the summer months 35% of the homes needed a cut.
The below showing trends chart also supports the data. There are historically less showings per listings in the summer months.
Increased DOM and price reductions during the summer can probably be explained by buyer demand and pricing. In the spring, we have a lot of buyer demand, but less inventory because sellers are waiting for their kids to get out of school before the get the house fixed up to list. By the time many of sellers are ready to list, it’s summer time, and a lot of the buyer pool is distracted with vacations. At the same time, many brokers are pricing those summer listings off the comps from the super high demand spring sales, where prices were driven up from lack of inventory. With less buyer activity and more homes coming on to the market, one would expect to see an increase in days on market as well as price reductions. It seems to happen every year.
There are a couple of messages here for buyer and sellers. First, if you were a frustrated buyer trying to compete with multiple offers this spring, it’s time to get back in the car and go house shopping. You’ll find more homes for sale, less competition, and you’ll have a better bargaining position. Summer is a good time to be a buyer.
The message for sellers? You might want to price a little below those spring comps. If not, you could be asking for a price reduction and greater days on market.