One aspect of a mean reversion or market crash is a plethora of homes listed for sale at any given time. Market data includes information about all manner of statistics. One important feature of any property listing is the number of days it’s been on the market. When days on the market (DOM) begins to increase for the average seller, there will naturally be an increase in the number of listings available for buyers to peruse. An increase in the volume of available homes shifts strength to buyers. High DOM figures are typically an indicator that something may be amiss with a particular property. But when these numbers rise across a market more broadly, it hints at a more systemic kind of weakness.
In a buyers’ market, sellers are less able to dictate the price and other features of an agreement to transfer property. When sellers maintain control, they often enjoy the benefits of a bidding war, the ability to pass on costs to the buyer, and faster selling timelines. This puts pressure on buyers to make rapid decisions when it comes to purchasing any home listing.
In a buyers’ market, sellers can see a decrease in the value of their property, as buyers have much more supply to choose from. These trends shift back and forth on a regular basis, but a sustained buyers’ market can lead to increasingly depressed prices. Over time this can lead to the potential for a crash.
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