Louisville: 31% more inventory, 25% fewer pendings, same closings. Scary?

Louisville: 31% more inventory, 25% fewer pendings, same closings. Scary?

Real Estate Agent · Louisville, KY · Member since 2017 · 1k+ posts · 1k+ votes

Fear is mostly a story about something you don't fully understand yet. The more you understand it, the less it can do to you. That's true of a dark bridge, it's true of a basement, and it's true of this housing market.

Here are the numbers that might make you want to run. All single-family homes in Jefferson County (Louisville), straight from our MLS.

The scary part

  • For sale in September: 2,527. A year earlier: 1,922. That's 31% more inventory.

  • Went under contract in September: 669. A year earlier: 888. That's 25% fewer.

  • In just the last 30 days, 658 sellers took their homes off the market and haven't put them back on. Some canceled, some let the listing expire. Same 30 days last year: 498. That's 32% more people giving up.

Now turn on the basement light

Sold in September: 858. A year earlier: 847.

People are still buying houses in this city at almost exactly the same pace. What changed is that buyers have more to choose from and less reason to rush. When buyers have choices, they have leverage. That's not a scary market. That's a negotiating market.

And those 658 sellers didn't stop needing to sell. They just stopped being on the MLS, which means most buyers can't see them anymore. A lot of them are now open to quieter, off-market conversations. If you're a buyer, that's the opportunity. The dated house in a good spot that's been sitting is where the room is. You buy it and add the value yourself. If you're a seller whose house didn't sell, it's usually price, condition or exposure.

Bonus, since somebody always asks this time of year: do you have to tell a buyer the house is haunted?

I'm a realtor, not a lawyer, so treat this as a starting point.

A "stigmatized property" is a home affected by something that happened there, not by anything physically wrong with it. A death, a crime, or a reputation for being haunted.

In Kentucky, since June 24, 2003, the law (KRS 324.162) says sellers and agents don't have to bring that stuff up on their own. Indiana's law works about the same way. But in both states, if a buyer asks directly, you have to answer honestly. So buyers: if it matters to you, ask in writing. Sellers: if it's the reason you're moving, it's usually smarter to say so up front than have it come back and haunt you later.

Does it hurt the price? A Wright State University study of 102 stigmatized homes found they took about 45% longer to sell and went for about 3% less. And a Zillow survey found nearly 70% of buyers said they'd buy a house they believed was haunted if it checked all their other boxes. A 3% discount and a little patience, in exchange for a story to tell at parties. That's a trade a lot of investors would take.

Question for folks in other markets: are you seeing the same thing? Closings holding steady while pendings drop and withdrawn listings jump? Or is your market actually slowing at the closing table too?

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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    3d

    @Rob Bergeron How many failed listings are you seeing?

    From an investors prospective I see a lot of them. I think it's maintaining the RE stalemate like you mention. It feels like pending's (below ask) vs. failed listings is pretty close. Sellers just quit than continue price dropping. I was following a flipped property that kept price dropping until today, and now it's off market. The investor must have pivoted. The problem is there's zero chance of CF with conservative numbers given the level of remodel. It's also over sized for a rental which doesn't always equate to more rent.

    At the same time I seeing cash offers. At least 3 houses I liked on Zillow sold in 10-15 days which tells me cash buyer, possibly OOS investor/first time owner. None of those properties will CF. They would be deeply negative in fact. I live 5 mins from those properties and know the numbers. Maybe we're just dumb locals. haha

  • Real Estate Agent · Louisville, KY · Member since 2017 · 1k+ posts · 1k+ votes
    2d

    @Jaron Walling Good question, and you're right that it's close. I pulled it. Jefferson County residential, last 30 days: 735 closed, and 671 came off the market without selling (93 expired, 578 canceled). Some of those cancels come right back with a new price or a new agent, so it overstates the true quits a little. Still, it's roughly one house giving up for every one that sells.

    That's the stalemate. A lot of sellers would rather pull it than take another cut, and the flippers who are in too deep on the rehab are the most likely to do exactly what you watched.

    On the quick cash sales: my guess is a lot of those buyers aren't buying for cash flow at all. Owner-occupants paying cash, or out-of-town buyers running different numbers than a local landlord would. You're not dumb locals. You're just underwriting a different deal. The ones that came off without selling are where I'd be making calls.

    Are you keeping a list of the ones that went off-market to see if they come back?

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