Overview
Days on market and sales velocity are two of the most revealing indicators of market behaviour. They show how quickly homes are selling, how buyers are responding to pricing and whether the market is gaining or losing momentum.
Appraisers monitor these indicators to understand local demand conditions and to ensure that the comparable sales used in a valuation truly reflect the market at the effective date.
This guide explains how to interpret days on market and sales velocity, and how these metrics influence appraisal outcomes across the GTA and surrounding areas.
Days on market and sales velocity influence:
• Comparable relevance
• Pricing stability
• Lender confidence
• Time adjustments
• Market commentary
• Competitive positioning
They help appraisers measure whether the market is heating up, cooling down or holding steady.
Understanding these metrics helps clients interpret appraisal results with more clarity.
Understanding Days On Market (DOM)
Days on market measures how many days a property stayed listed before selling.
DOM reveals buyer interest, pricing alignment and overall market momentum.
Sales velocity measures how quickly properties in a neighbourhood are selling relative to the number of homes available.
It reflects the speed at which the market is absorbing inventory.
- High Sales Velocity
This indicates strong buyer demand.
Characteristics include:
• Rapid absorption of listings
• Tight competition
• Strong pricing support
• Increased urgency among buyers
Appraisers must use recent comparables to avoid undervaluing in these markets.
- Balanced Sales Velocity
A balanced velocity means buyers and sellers are negotiating on equal footing.
Traits include:
• Steady absorption
• Predictable pricing
• Moderate competition
This produces reliable comparable sales.
- Low Sales Velocity
Low velocity is typical in softening or high inventory markets.
Impacts include:
• Slow absorption of listings
• Price pressure
• Buyer caution
• Increased negotiation leverage
Appraisers must ensure comparables reflect this slower environment.
How Appraisers Use DOM and Velocity During Valuation
- Comparable Screening
Appraisers avoid comparables that:
• Sat on the market excessively long
• Sold under unusual pressure
• Were overpriced and repeatedly reduced
These factors may skew data.
- Market Commentary
Appraisers include DOM and velocity analysis in their market section to help lenders interpret risk and stability.
- Time Adjustments
If comparables closed during a different DOM or velocity environment, adjustments may be required.
Example:
• Using a spring sale in a slower fall market
• Using a soft winter sale in a rising spring market
- Identifying Outliers
A comparable that sold much faster or slower than typical may not reflect true market value.
- Risk Evaluation
Lenders analyze DOM and velocity to determine whether the market is stable enough to support the loan being requested.
“A home that sits longer must be overpriced.”
Not always. Unique layouts, tenant occupancy or timing can slow a sale.
“Fast sales always mean the market is booming.”
Fast sales can occur in micro markets even if the broader market is steady.
“DOM does not matter for appraisals.”
It does. DOM helps appraisers interpret pricing behaviour and comparable strength.
“Sales velocity is the same across the GTA.”
Not at all. Even two nearby neighbourhoods can behave differently.
Do appraisers rely on DOM for value?
DOM does not determine value, but it influences comparable relevance and market interpretation.
Can high DOM reduce my appraisal value?
If high DOM reflects a weaker market, it may influence time adjustments or comparable weighting.
Does low DOM increase value?
Low DOM signals strong demand, which may support higher comparable sale prices.
Do lenders consider sales velocity?
Yes. Underwriters assess stability, demand and risk through market commentary.
If you want to understand how days on market and sales velocity in your neighbourhood may influence your appraisal, our team can walk you through the current market behaviour.
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