One of the most important pieces of multiple listing service (MLS) data available to real estate agents and buyers is "days on market." This reveals the number of days a house has been listed on the market and is important to the functioning of a healthy real estate market.
In response to the COVID-19 pandemic in the United States, the economy has been effectively put on pause for a little while, especially in hard-hit areas. As a result, the real estate market has virtually ground to a stop -- social distancing makes things like showings, closings, and meeting with real estate agents next to impossible. At least one major market has put a hold on the "days on market" clock because of this. Here's what it means, and why it's important.
Why is "days on market" important?
Sellers want to minimize the number of days their properties sit on the market. Homes tend to get the most attention when they're new on the market, and buyers are more likely to submit offers close to the full asking price. In contrast, the longer a home sits on the market, the more "wiggle room" a buyer generally thinks there is.
Think of it this way: If a buyer sees that your home has only been on the market for three days, they're probably going to assume you're not desperate to sell and that you aren't likely to accept a lowball offer. On the other hand, if a buyer sees that your home has sat on the market for six months, they are more likely to assume that you might be a bit more willing to negotiate.
New York has stopped the clock -- for now
In response to the COVID-19 outbreak, the Real Estate Board of New York has decided to effectively hit the pause button when it comes to its MLS.
This certainly makes sense. New York Governor Andrew Cuomo has ordered nonessential businesses to temporarily close, and this includes real estate agencies. If the real estate market is essentially nonfunctional right now, are listed properties truly "on the market" in the usual sense of the term? Pausing the days-on-market calculation could prevent listings from looking more stale than they truly are and could keep more homes listed on the MLS during the economic shutdown, as opposed to sellers choosing to pull their homes from the market and relist them when market activity resumes.
Many New York real estate agents applaud this measure, or at least don't have a problem with it. On the other hand, there are some who feel that this is deceptive and manipulative and denies buyers access to accurate data that could influence their offers and purchase decisions.
Will other markets follow?
To be fair, there are certainly arguments to be made both for and against stopping the days-on-market clock while the coronavirus situation plays out. However, the fact is that the real estate market is minimally functional in many parts of the United States, so it wouldn't be at all surprising if other local real estate organizations -- especially in the hardest-hit areas of the country -- make similar moves in the coming weeks.