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« Placer County Real Estate Sales September 15th - September 21st, 2008 | Main | Placer County Inventory Level Graphs »

September 29, 2008

Cumulative Days on Market (CDOM)

Way back in December of 2006 I wrote a blog entry titled "Is Days on Market a Dependable Housing Market Indicator?".

The article covered many of the reasons why I felt that the days on market statistic (DOM) was far from a reliable market indicator.

One of the main problems I wrote about regarding DOM was the practice of agents de-listing and then re-listing properties to reset the DOM counter and make the listing appear "fresh" in the MLS.

A similar reseting of the statistic occurred when properties expired after being listed for months and then were re-listed by the same agent or a new agent.

The reset caused by intentional removal of listings or because of an expiration caused the average days on market to appear much lower than it actually was.

After receiving feedback from users, Metrolist recently added a new statistic called Cumulative Days on Market or CDOM.

This statistic is much closer to what agents and consumers thought DOM was originally supposed to represent, which is the time it takes a property to sell from when it was originally listed to when it had an offer accepted.

CDOM differs from DOM by keeping a running tally of the DOM for a property for any listing of that property that occurs within 30 days of a listing of that same property.

So if a property was on the market 30 days, was then taken off the market for 2 weeks and was then re-listed for another 30 days before selling, the DOM market statistic would be 30 days, while the CDOM statistic would show the full 60 days the property was on the market.

CDOM will make it clearer to perspective buyers and agents how "fresh" a listing is and it will also give a better indication of average marketing times when used to analyze the market as a whole.

An example of how this can effect the perception of average or expected marketing times is a comparison of the DOM vs. CDOM for residential properties sold in Placer County during August 2008. The average DOM was 61 days during the period, while the average CDOM was 88 days. Using DOM as a guide it would seem that it took an average of 2 months for homes to sell in Placer County during August, but the average CDOM shows that it was actually closer to 3 months.

Now that CDOM is available, I will be using it in replacement of DOM on future statistics updates. DOM may prove useful for analyzing a particular agent's or company's performance as listing agents, but for the purpose of analyzing market trends I believe CDOM is a much better statistic.

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Todd Nace Says:

When you refer to Marketing Time I think it should differ from DOM or CDOM houses in the construction phase are running DOM but are not very marketable. Over priced houses are running DOM but are not very marketable. I'm an appraiser who is having a problem with the new 1004mc form which requires a comparison of Marketing Time using DOM.

Patrick Hake Says:

I agree Todd.

Days on market and cummulative days on market are useful to get a feeling for the market, but are not as useful for determing the actual amount of time it will take to sell a specific home.

I went over a lot of my concerns regarding the DOM statistic on a post I wrote back in 2006 located at http://www.placercountyhomesandland.net/2006/12/is_days_on_mark.html

Van Wolslagel Says:

1/2012 While all this sounds good - DOM is a necessary time frame to tell the client who long it took to sell the property from the last listed price. I could care less about CDOM as the first session of listing prices may have been just to get the listing in place. The last list price and date it listed until the date put under contrtact is what the clients needs to see and know to be able to correctly price the property compteitively, not what the seller wants, but competitively.

Respects,
Van Wolslagel
THE APPRAISAL WORKSHOPPE CO.
San Bernardino county, Ca.

Patrick Hake Says:

I can see your point when looking at it from an appraisers perspective and when using the statistics to advise sellers on how to price a property for sale.

The majority of the vistors to my site are people interested in purchasing a property or just consumers interested in the overall condition of the market.

The CDOM statistic give a much better indication as to the age of the listing and the relative time it is taking the market to move.

DOM has its uses, as you have illustrated. However, when used as a statistic to measure the speed with which the inventory is selling, I feel CDOM is more accurate.

-Patrick

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