No one in the Greater Toronto Area knows how long it takes to sell the average home and, according to the Toronto Real Estate Board, they aren’t trying to figure it out.
Every month, TREB issues market updates that track statistics like average selling price, number of new listings, transaction volumes and so on. Featured on the first page and every subsequent page is a figure described as average days on market, or “DOM.” For October, 2018, for all home types across TREB, that average is 24, up from 23 in 2017.
But DOM can’t tell you how long it takes to sell a house in the GTA, in part because there is a widespread practice of terminating and relisting homes for sale – for many reasons – that has the effect of rendering that number virtually meaningless.
“It’s one of the statistics that’s been in there, it’s not my go-to measure when I’m looking to classify a market,” said Jason Mercer, TREB’s director of market analysis. He said DOM only tracks listings, not properties, a technical difference not presented anywhere in the report. And, according to the report’s footnotes, it only counts the DOM of listings with a “firm transaction” attached to it, which means a terminated listing with no sale doesn’t factor into the figure. Nevertheless, he keeps an eye on how DOM trends, which he says does tend to track other market conditions.
“It is misleading,” said Josie Stern, a real estate agent in midtown Toronto. “To me, it means very little. We do our own statistics for the neighbourhoods we work in, Cedarvale, Forest Hill. Each of those neighbourhoods act differently.”
Ms. Stern said agents often cancel one listing and then relist under a new MLS number to attempt to hide a price change. “They are hoping that history will disappear, I think every agent has done it once, for sure. It’s very common, and I don’t think that will ever change.”
But the relisting can result in erasing months worth of days on market where the house wasn’t selling.
For example, in the Chaplin Estates neighbourhood of Toronto (near Davisville station), the DOM in the past two quarters for freeholds was eight days, but for condos it was 19, according to data shared by Fourwalls Digital, a Toronto real estate data firm.
A house at 242 Chaplin Cres. was listed three times between Sept. 11 and Oct. 15, for 10 and then 20 days, and then finally it seems to have sold conditionally immediately after dropping its price to $3.398-million, a $400,000 reduction from its opening list. TREB data would only record the final listing’s DOM, which could pull the submarket’s average DOM down.
The termination details come from Housesigma.com, one of the virtual office websites publishing some of the relatively new transaction data released by TREB. One of Housesigma’s innovations is to capture terminated listings and active listings by address. Two other nearby detached home listings, which did not result in a sale, also make a mockery of DOM: 88 Chaplin Cres., was first listed April 11 and terminated without sale on May 15, then relisted from May 22 to and terminated again June 1. In total, it was on the market for 44 days, but the second for listing was only 10 days. Another nearby relisting was 171 Chaplin Cres., it was for sale between since Aug. 30 and Oct. 16, but was terminated twice, the first time after 40 days, the second time after just five days.
There are signs this behaviour is sufficiently widespread to be statistically significant. The city of Toronto accounted for 5,292 of TREB’s total 14,341 new listings in October. Scott Ingram, realtor with Century 21, keeps track of termination data as a proxy for relisting, and found that October, 2018, had 1,005 terminations (there are also a smaller number of suspensions and cancellations each month). The year-to-date numbers of terminations are actually down compared with 2017, but if one contrasts terminations as a percentage of sold detached, semi-detached or row houses, it reached 78 per cent in October. In the spring of 2017, as the market correction bloomed into full force, that ratio was routinely above 110 per cent of terminations to sold “ground” houses.
“My hypothesis here is, if houses are selling well, then you don’t have to terminate. It’s only if it didn’t sell as quickly as you expected that you’d terminate and relist [for example, failed bidding war, sitting on market two weeks and want to make it look fresh again],” Mr. Ingram said.
York Region, among the hardest-hit GTA markets for price drops and where TREB reports it takes an average 35 days for a listing to result in a sale, has also seen a flood of terminations. “Terminations haven’t been less than solds since April, 2017,” Mr. Ingram said. Currently, terminations are about 150 per cent of sold detached homes, down quite a bit from the wild highs of 234-per-cent terminations to solds seen in July, 2017.
The terminate and relist pattern could also be inflating new listing figures, but again Mr. Mercer said TREB does not run address-based analysis to identify average termination-to-relist figures.
Relisting is common across the country, according to realtor boards, and because of the messiness of DOM data, other market reports pay it less attention.
“In Vancouver, we don’t really heavily emphasize it,” said Phil Moore, president of the Real Estate Board of Greater Vancouver, essentially because the number doesn’t tell you much about the time to sale. “There are occasions where it is taken if off the market after no success, they will call in a painter and freshen up the place,” and then relist the property, resetting the days on market counter back to zero. “Realtors serve their clients, it’s one of the things that happens in our market.”
Despite that, he readily admits DOM is a number buyers pay attention to. “The first thing I’d want to know if I was a buyer is how many days on the market, was it listed before, what price was it listed before.”
The same is true in Calgary, which presents the figure in its monthly updates, but does not elaborate on it.
“We know there’s inconsistencies with how its measured, its been the case in our market forever,” Calgary Real Estate Board chief economist Ann-Marie Lurie said. “We do have other measures that we have been looking at, something to track cumulative days on market.”
Jerome Carron, chief executive of Fourwalls, says his company actually built software that would accurately report how long it took an agent to sell a house, from first listing to final sale, and provide the kind of market intelligence that agents such as Ms. Stern have to do painstakingly by hand.
“Agents didn't really like it, it created a different conversation they didn't want to have,” he said. “It would be talking about something to consumers, that shouldn't be happening, that [agents] have probably done in the past to better [their] numbers. We have seen people take properties off simply to get DOM down.”
Sometimes, it’s done simply to get a nominal price change reflected in the automated e-mail blast reports realtors generate for clients looking for recent listings.
“This is an industry that is a little bit of a free-for-all,” said Dolores Trentadue, who works in Markham and Stouffville, Ont. “DOM is always longer for agents that are not local,” she said, thinking of a house she’s watching that has been on the market for more than 100 days at what she thinks is the wrong price. “They keep relisting and relisting … they are doing damage to property.”
Lauren Haw, CEO of online broker Zoocasa, says DOM can also be skewed higher than it should be, because of “holdbacks” to encourage a feeding frenzy.
“That’s something that has been chosen in many parts of Toronto since 2010; whenever bidding wars are common, we see these holdback periods. A prime detached listing on the market for seven to eight days on purpose so bidders will have an opportunity to view the home. DOM will look longer in some of the best neighbourhoods,” she said. And in areas with tougher markets, it might actually look shorter than it should. “There will be properties relisted six times over the span of a year, it finally sells and the agent says ‘SOLD in two days.’”
TREB breaks out DOM for every house type and for every subregion it reports on (covering 500 communities). Mr. Mercer says that even though it’s been highlighted in TREB reports for 10 years, he’s open to the idea of creating a cumulative DOM figure that captures the termination and relist pattern.
“We are looking to enhance the reporting that we do, that may be a number we can produce moving forward,” he said.