The Power of Proactivity in Real Estate

Have you ever watched a chess master at work? Each move is made not just for the present but for the unfolding game. If she is going to win, one key will be mastering the habit of proactivity.

It’s little wonder that this habit is the first one mentioned of Stephen Covey’s Seven Habits of Highly Effective People. Will Real Estate professionals need this quality for 2024?  Absolutely.

As Covey mentioned, exemplifying this habit means that we give ourselves space between stimulus and response and claim our control.   In this article I’ll be reviewing activity from the first week of January with the goal of helping you to be proactive in the real estate game.

Current Market Pulse: A Snapshot of Early January 1/1/24 – 1/7/24

Pie chart and table showing MLS activity for single-family homes in Louisville, KY, from January 1 to January 7, 2024. The majority, 88.6%, are active listings, with 4.4% pending, 2.8% closed, and 4.2% in other statuses. The total listings are 1,379. Data from FlexMLS and provided by choiceappraisals.org.

Is Our Market Bursting with Options?

As we stepped into January, we saw 1,222 homes for sale here in Louisville, KY. This could mean lots of choices for buyers.  But proactive real estate professionals know there’s a need to look a bit closer.

Only a small slice of homes are actually getting offers (4.4%) and even fewer are being sold (2.8%). Could some homes be priced too high? Or is something else making buyers hesitate?

Something we can’t get away from is the fact that interest rates are between 6.62% and 7.20% for most home loans (depending on where you shop)​​. Even though these rates have dipped a tiny bit, they’re still pretty high compared to the past, which could make buyers slow down and think twice as they contemplate that higher monthly payment.

Plus, let’s be real, moving when it’s cold and right after spending time off with family isn’t a fun idea for many people. That can definitely make for a slower market.

So what’s the real deal in Louisville, with our market (1222 active listings) in this chilly season?

We might have:

  • a vibrant market with lots of options for buyers.
  • a market that’s taking a breather with homes not selling as fast as expected. Or
  • overpriced listings.

To really understand what’s happening, we’re going to take a closer look at the homes that did sell during the first seven days of January 2024 and check out the Cumulative Days on Market of homes that are still active.

What Week 1 -January 2024 Sales Reveal

Pie chart representing the Cumulative Days on Market (CDOM) for 39 homes that closed in Louisville, KY, from January 1 to January 7, 2024. A significant portion, 56.4%, closed within 0-30 days, followed by 15.4% each for the 31-60 day and 61-90 day ranges, 10% closed in 91-120 days, and 2.6% took over 121 days. Data from FlexMLS website and provided by choiceappraisals.org.

Peering into the recent sales gives us a clearer picture of our winter market. In January’s first week, out of 1,222 homes up for grabs, 39 made it across the finish line. But how fast?

The pie chart lays it out: Over half of the homes sold (56.4%) in 30 days or less. This brisk movement indicates a segment of our market is priced just right—homes that buyers are snatching up quickly, likely because they hit that sweet spot of value and appeal.

Then there’s the 15.4% that closed in 31-60 days and another 15.4% in 61-90 days.

These homes took their time, but not too much time. It suggests a balanced approach—perhaps a minor price negotiation here or a little patience there paid off.

The smaller slices—10% selling in 91-120 days and a sliver at 2.6% beyond 120 days—tell us some stories took longer to tell.

These could be homes where initial expectations needed adjusting, whether due to price, property quirks, or just finding the right buyer who sees a diamond where others didn’t.

While this data strengthens our understanding of the Louisville market timings, a deeper layer awaits our attention – the interplay between the final Sale Price and the Original List Price (SP/OLP). This ratio sheds light about the art of pricing accurately from the onset.

January Sales with a focus on Sold Price/List Price Ratios

A table detailing Cumulative Days on Market and Sold/List Ratios by Market Time for closed property listings in Louisville, KY, from January 1 to January 7, 2024. It shows 22 listings (56.41%) sold within 0-30 days with an average SP/LP of 99.36, and an average SP/OLP of 99.22, indicating strong market activity and pricing. The table also includes data for other time frames up to 121+ days with varying sold/list ratios. Information sourced from FlexMLS website and provided by choiceappraisals.org.

The Average Sold Price to Original List Price (SP/OLP) ratio tells us how the final sale price compares to the initial asking price.

0-30 Days: Homes in Louisville, KY that sold within a month almost met their asking price, with an SP/OLP of 99.22%, indicating they were likely priced right from the start.

31-60 Days: The drop to an SP/OLP of 94.92% for homes sold in one to two months hints at negotiations, perhaps due to ambitious initial pricing.

61-90 Days: A further dip in SP/OLP to 92.13% for sales in two to three months suggests either significant price drops or shifts in market trends.

Armed with stats like these you can advise clients on pricing their homes to sell within a desired timeframe, considering market dynamics.

But what about homes that are still on the market? How long have they been sitting, and what does their waiting time tell us?

To answer that question, let’s pivot to a Cumulative DOM analysis for active listings.  In doing so, we’ll uncover another layer of the market’s story.

Average and Median Days on Market – for Homes that Have Not Sold

Table of CDOM Analysis for 1,222 active real estate listings as of January 7, 2024, showing the number of listings per area, with minimum, maximum, average, and median days on market. The longest time on market is 2,679 days in area 6, with other areas varying significantly. This data can help understand different market velocities and inform pricing and selling strategies. Source: FlexMLS website, courtesy of choiceappraisals.org.

Line graph showing the average and median Cumulative Days on Market (CDOM) for active real estate listings by area as of January 7, 2024, excluding outliers. The average CDOM is indicated by a red line and the median CDOM by a blue line, highlighting the differences and trends in market time across various areas. The graph indicates some areas with higher average CDOM, suggesting a slower sale process in those regions. Data provided by FlexMLS website and choiceappraisals.org.

The canvas of our January market, with 1,222 active listings, is rich with detail when viewed through the lens of CDOM.  The average CDOM across all MLS Areas is currently between 66 and 109 days.

The median CDOM, which ranges from 58 to 79 days across the areas, is a more balanced lens since the median is less affected by outliers. It indicates that over half of the homes have been listed for about two months or less.  This is a more typical timeframe in a balanced market.

These insights are crucial for managing expectations on both ends—sellers can gauge how long it might take to sell their home, and buyers can spot opportunities for negotiating better prices on listings that have been on the market longer.

As we wrap up our review of January’s first week, remember that these statistics do more than just inform—they enable you to lead in the marketplace with authority and foresight.

But in order for that to happen you have to continue to pause after your exposure to data like this. Think about how it relates to a current or upcoming listing, and then take the appropriate response that indicates purposeful control – That’s being proactive!

Next week, we’ll delve into the second of Covey’s habits, ‘Begin with the End in Mind’, to further refine our strategic approach to real estate success.

Have a great week.

Conrad Meertins Jr.