Understanding Market
Velocity & Momentum
Days on Market (DOM) and sales velocity are two of the most revealing indicators of buyer behavior and local demand.
Why Velocity & DOM Matter
Days on market (DOM) and sales velocity aren't just statistics; they are the pulse of buyer demand. They provide the context required to transform past sales into current value.
The Analytical Impact
By monitoring whether the market is heating up, cooling down, or holding steady, we ensure your appraisal results reflect the most current competitive landscape possible.
Market Velocity Metrics
Understanding Days On Market (DOM)
- Decisive buyer action and competitive offers
- Pricing remains firm with minimal negotiation
- Typical of low supply or rapidly rising markets
- Predictable buyer activity and stable pricing
- Reasonable negotiation periods (standard conditions)
- Appraisers view this as a sign of long-term stability
- Increased frequency of price reductions
- Higher rates of conditional offers
- May lead to downward time adjustments in reports
Days on market is a primary filter for comparable relevance. If older comparable sales reflect low DOM but the current market shows high DOM, appraisers must apply "Time Adjustments" to ensure your valuation is accurate to the effective date.
Understanding Sales Velocity
Sales velocity measures how quickly properties are selling relative to the available inventory.
1. High Sales Velocity
Indicates strong buyer demand and rapid absorption of listings. Features include tight competition and strong pricing support. Appraisers must prioritize the most recent sales to avoid undervaluing in these fast-moving markets.
2. Balanced Sales Velocity
Buyers and sellers negotiate on equal footing with steady absorption and predictable pricing. This environment produces highly reliable comparable sales with minimal need for drastic adjustments.
3. Low Sales Velocity
Typical in softening or high-inventory markets. This leads to buyer caution and increased negotiation leverage. We ensure comparables reflect this slower environment to provide a realistic "effective date" value.
How Appraisers Apply Velocity Data
🔍 Comparable Screening
We filter out properties that sat on the market excessively long or sold under unusual pressure. This ensures skewed data doesn't compromise your valuation.
📝 Market Commentary
Detailed DOM and velocity analysis is included in the market section to help lenders interpret risk and stability in your specific neighbourhood.
📍 Identifying Outliers
A property selling much faster or slower than the local average may not reflect true market value. We isolate these to prevent "valuation noise."
🛡️ Risk Evaluation
Lenders use our velocity data to confirm market stability. A healthy sales pace supports the loan-to-value ratios you are requesting.
⚖️ Strategic Time Adjustments
If comparable sales occurred in a different velocity environment—such as a spring surge vs. a winter lull—we apply time adjustments to reflect the market exactly at the effective date.
Common Misunderstandings
"High DOM = Overpriced"
Not always. Factors like unique layouts, tenant occupancy, or poor seasonal timing can slow a sale even if the price is fair.
"Fast Sales = Booming Market"
Rapid sales can occur in specific micro-markets or due to low inventory, even if the broader GTA market is holding steady.
"DOM Doesn't Affect Appraisals"
It absolutely does. DOM is a primary tool for appraisers to interpret pricing behavior and the relative strength of comparable sales.
"Velocity is Uniform Across the GTA"
Market speed varies wildly by area. Two neighboring pockets can behave differently based on school zones, transit, or local supply.
"Stale Listings are Useless Data"
Properties that sit on the market provide critical "ceiling" data, helping appraisers understand what buyers are currently rejecting.
"Velocity is Permanent"
Sales velocity is highly sensitive to interest rate shifts and seasonal cycles. Today's "fast" market can transition in just 30 days.
Market Velocity FAQ
Common questions regarding how market timing influences your appraisal report.
Days on Market (DOM) does not directly determine value, but it is a critical diagnostic tool. It helps appraisers weigh the relevance of comparable sales; a property that sold in 3 days vs. 90 days tells a very different story about buyer demand and pricing alignment.
If a high DOM is characteristic of the current market, it may signal softening demand. This could lead to downward "Time Adjustments" if the older comparable sales used in the report closed during a period of higher velocity and stronger prices.
Low DOM signals strong buyer urgency. While it doesn't automatically "add" dollars, it justifies using the highest-priced comparable sales and may support upward time adjustments if prices are rising rapidly due to inventory shortages.
Yes. Mortgage underwriters review the Market Commentary section of an appraisal to assess risk. They want to see that the property is located in a stable or increasing market where the collateral could be sold quickly if necessary.
Navigate Your Market with Confidence
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 current market behaviour and what it means for your valuation.
