An analysis of Time On Market and Advertised to Sale Price Differences

OVER TIME

European Real Estate Society Conference

Milano, Italy, 23-26 June 2010

Peter Rossini*, Valerie Kupke, and Paul KershawUniversity of South Australia

&Stanley McGreal

University of Ulster & University of South Australia

Time on Market Indicators for Adelaide, South Australia Slide 2

Introduction

• TOM measure of the buoyancy of the REmarket. • This preliminary study uses data from 24 quarters from

2003 to 2008.• 77,176 observations - over 55% of all market transactions

of detached residential properties• Data combines transaction records with details of property

marketing data from RPData. • Use TOM and first to last advertised price and across the

different locations and for each property type.

Time on Market Indicators for Adelaide, South Australia Slide 3

Changing TOM Distributions

Time on Market Indicators for Adelaide, South Australia Slide 4

Median TOM over time

Time on Market Indicators for Adelaide, South Australia Slide 5

-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

0

5

10

15

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25

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50

2003

Q1

2003

Q2

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% C

hang

e in

Med

ian

Pric

e

Day

s on

Mar

ket

Quarter

Chart of Median TOM and % Change in Median Price

Median TOM*

% Change House Prices**

Correlation =-.789

* Authors Research** ABS Establish House Price Index (Adelaide)

Median TOM & % Change Price

Time on Market Indicators for Adelaide, South Australia Slide 6

Region 2003 2004 2005 2006 2007 2008 Total

Central 15 22 22 22 22 29 22

Western 15 22 36 29 23 29 23

Coast 15 22 36 29 23 29 24

South Western 15 22 22 22 20 26 22

South Eastern 15 22 29 28 22 33 23

Inner Northern 15 22 36 29 22 29 23

North Eastern 8 22 36 31 22 37 25

Northern 8 29 50 50 31 45 36

Hills 15 30 50 43 32 43 35

Southern 8 27 36 30 21 34 26

Total 15 22 36 35 22 35 28

Year

TOM by Year and Region

Time on Market Indicators for Adelaide, South Australia Slide 7

TOM by Region

1515

1515 15

15

8

8

8

2929

2926 33

29

45

43

34

37

Median TOM – Houses 2003 Median TOM – Houses 2008

15

Time on Market Indicators for Adelaide, South Australia Slide 8

Main Rooms 2003 2004 2005 2006 2007 2008 Total

3 15 16 36 28 23 43 23

4 15 22 29 29 22 30 22

5 8 22 35 29 21 32 22

6 15 22 37 36 22 35 28

7 15 29 43 37 27 37 29

8 15 30 43 43 36 47 36

Total 15 22 36 35 22 35 28

Year

TOM by Year and # Main Rooms

Time on Market Indicators for Adelaide, South Australia Slide 9

Hazard ModelYear, Regions, Rooms, Land Area

Chi-square df Sig.

Chi-square df Sig.

Chi-square df Sig.

1553246.123 7116.479 20 .000 6192.208 20 .000 6192.208 20 .000

B SE Wald df Sig. Exp(B)

SALES.Year 5066.966 5 .000

SALES.Year(1) .830 .014 3360.802 1 .000 2.294

SALES.Year(2) .198 .012 253.100 1 .000 1.219

SALES.Year(3) -.075 .012 36.592 1 .000 .928

SALES.Year(4) -.058 .012 22.943 1 .000 .943

SALES.Year(5) .168 .012 197.472 1 .000 1.183

ROOMSCat 893.319 5 .000

ROOMSCat(1) .251 .052 23.434 1 .000 1.285

ROOMSCat(2) .311 .018 300.658 1 .000 1.365

ROOMSCat(3) .329 .012 739.585 1 .000 1.390

ROOMSCat(4) .220 .013 294.972 1 .000 1.246

ROOMSCat(5) .122 .014 73.190 1 .000 1.130

SALES.Region 773.078 9 .000

SALES.Region(1) .040 .016 6.150 1 .013 1.040

SALES.Region(2) -.026 .014 3.352 1 .067 .974

SALES.Region(3) -.041 .016 6.123 1 .013 .960

SALES.Region(4) .154 .017 85.468 1 .000 1.166

SALES.Region(5) .024 .017 2.036 1 .154 1.025

SALES.Region(6) -.031 .017 3.174 1 .075 .969

SALES.Region(7) -.007 .013 .315 1 .575 .993

SALES.Region(8) -.202 .011 329.368 1 .000 .817

SALES.Region(9) -.245 .027 81.317 1 .000 .783

LandArea .090 .069 1.727 1 .189 1.094

Omnibus Tests of Model Coefficientsa,b

-2 Log Likelihood

Overall (score) Change From Previous Step Change From Previous Block

Variables in the Equation

Time on Market Indicators for Adelaide, South Australia Slide 10

Hazard ModelYear, Regions, Rooms, Land Area

Time on Market Indicators for Adelaide, South Australia Slide 11

Using Hazard Modelsto develop an index

• Two methods used to estimate this index.• 1 - single Cox regression (hazard model) is estimated -

dummy variables or each quarter with region, main rooms and land area

• 2 - series of Cox regressions with two quarters of data and one dummy to indicate the change with region, main rooms and land area.

• Index created from the odds-ratios – from the exponents of the coefficients.

Time on Market Indicators for Adelaide, South Australia Slide 12

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

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Med

ain

TOM

Quarter

TOM index based on Median, Single Cox and multiple Cox Regression models

Median TOM*

Multiple Cox

Single Cox

TOM index based on median and hazard model results

Time on Market Indicators for Adelaide, South Australia Slide 13

.000

.200

.400

.600

.800

1.000

1.200

1.400

1.600

4 Rooms

5 Rooms

6 Rooms

7 Rooms

8 or more Rooms

Plot of hazard model odds/ratios over time

Time on Market Indicators for Adelaide, South Australia Slide 14

.400

.600

.800

1.000

1.200

1.400

1.600

Western

Coast

South Western

South Eastern

Inner Northern

North Eastern

Northern

Hills

Southern

Plot of hazard model odds/ratios over time

Time on Market Indicators for Adelaide, South Australia Slide 15

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-60000.00

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.00

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%Ch

ange

in H

ouse

Pri

ce

Pric

e D

iffer

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Quarter

First to Last Advertised Price Change

Percentile 95 Percentile 05Median % Change House Prices**

First to Last Advertised price over time

Time on Market Indicators for Adelaide, South Australia Slide 16

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%Ch

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ouse

Pri

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Pric

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iffer

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Quarter

First Advertised to Sale Price Change

Percentile 95Percentile 05Median% Change House Prices**

First Advertised to actual sale price over time