Failed Listings: An Important Metric for Measuring Market Health

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By Randy Dyck

Failed listings?otherwise known as expired, cancelled, and/or terminated listings ? have a lot to teach investors about the real estate market. These failed listings are properties that do not sell after being exposed to the market due to their location, condition, size, price, and/or the market condition. Most market analyzers spend a great amount of time looking at sales volume, inventory numbers, days on market, absorption rates, housing price index (HPI), median price, and other market statistics to evaluate the market conditions. However, one statistic that is rarely used for tracking the market and its cycles are failed listings.

 

Failed listings indicate the health of the market, as well as giving insight regarding the specific phase (boom, slump, and recovery) of the real estate cycle for a specific area and time. In ?s book, Secrets Of The Canadian Real Estate Cycle, Campbell writes about the key drivers?demographics, finance, and emotion?that effect the three phases of the real estate cycle. These drivers are critical in understanding the entry and exit points of each individual phase of the market. Interestingly enough, failed listings?or lack of failed listings?in the market place are one of the emotional drivers. Large numbers of failed listings reduce confidence in the market and bring forth an emotionally perceived buyer?s market. On the other hand, a limited number of failed listings drives confidence in the market place causing an emotionally charged sellers? market. Charting failed listings over a long period of time provides factual, not emotional, insight to the real market conditions and where the trend of the cycle is heading. It can also be worthy to note that any real estate investors that are looking for new properties could make use of different intelligent systems found on the internet such as this expired listings lead generator to ensure you have the data available to win the next listing you have your eye on.

 

Throughout the last twenty-five years, I have been an active investor and realtor in the Fraser Valley of British Columbia. I have seen two full real estate cycles of the market?boom, slump, and recovery. Studying the failed listings count for the Fraser Valley market over the last twenty years, one will quickly understand the entry and exit points of the three individual phases of the cycle. In the years of 1994/1995, the slump phase began for the 90?s. In 1995, the peak of failed listings was recorded at 17,413 by the Fraser Valley Real Estate Board. In 2003, failed listings were recorded at a low number of 6,612 which coincided with the middle boom phase of the 2000?s. But as all markets continue on their cycle of ups and downs, 2008 recorded a high of 18,617 failed listings which sent a factual message that the slump had once again come full circle. The failed listing graph (below) of the Fraser Valley real estate market clearly indicates the highs (slump phase) and the lows (boom) over the last 20 years.

 

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History continues to show that trends in the market place repeat themselves. By following and tracking the failed listings, there is tremendous insight into the entry and exit points of each cycle phase.

 

DyckRandy Dyck has been a top producing realtor in the Fraser Valley since 1992. He and the Eximus Real Estate Team have sold over 3000 properties in the past twenty years. Randy and the six agents of the Eximus team serve investors in Chilliwack, Abbotsford, Mission, Maple Ridge, Langley, and Surrey. Randy personally invests in Multifamily, Commercial, and Development properties, but does not believe in owning Recreational property. Together, Randy and the Eximus Team are passionate about helping investors find the right properties for their investment portfolios.

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