Way back in the year 2000, over 44% of all listings that came on to the Louisville real estate market actually sold.  Whether or not you are impressed or depressed by that statistic is besides the point, but since that time, there have been only three other years when that feat has been matched, in 2002, 2003 and 2005.

Every other year saw a smaller percentage of Louisville homes for sale actually find a buyer and make it all the way to the closing attorney successfully!  Since 2005 in fact, when we divide the number of new listings hitting the market in the first quarter of each year, by the number of properties marked “SOLD” in the same time frame, we see a decreasing percentage, year to year, until we get to 2010, the lowest value on the graph, at just over 31% of all listings being sold!

First and foremost, this strikes me as a pretty compelling argument at how ineffective the MLS is as a selling tool, only 1/3 of all homes being listed actually sold!  The MLS is great for sharing information, but as a sales tool?  Not so much.  Don’t let any Realtor tell you that the MLS is the bulk of their marketing, it isn’t enough and isn’t an effective marketing tool.

Second, keep in mind that some of these listings are going to be the same property, listed over and over.  For instance, if a seller speaks with a Realtor who tells them that they should list their house at $500,000 and it sits there for 6 months without any buyers, and then they take it off the market for awhile and try again at, with the same Realtor at $450,000 for two more months.  Then they hire a new agent and sell it in one week when priced at $399,900.  In that example, that would count as three listings and one sale.

Last thought:  I have been hearing from a lot of people that they think this year “feels” like real estate is selling better, but get confused or don’t believe me when I tell them that historically speaking, we are still selling at pretty low levels.  The reason sellers are more optimistic today and why people “feel” like the market is doing better is because a higher percentage of homes are selling.  They are hearing about more friends selling, or more accurately, they are likely not hearing as many negative stories about people not being able to get their home sold!  This lack of negativity is all based upon our current percentage of sales being at its highest level since 2005.

Look at the graph below, showing the number of Louisville homes sold, and let me know what the first thing you notice is, in regards to the first quarter of this year:  are you impressed that this seems to be the best start to the year in the past three or four years?  Or are you depressed that even what seems to be an uptick this year still shows up as being relatively low when compared to the last 10-12 years?

So far in the first three months this year, the local Board of Realtors reports that 2,127 Louisville homes sold and closed, the highest total since 2009.  That would normally be good news, indicating that the market is getting back to a more normal level than we seen over the past few years.  But taking a broader view, looking past just the immediate past, we see that 2012 actually scores in the bottom half of the past 13 years!

A graph that goes back this far allows us to see trends that can’t be seen in most data Realtors provide, simply year over year.  For instance, between 2001 and 2007, the number of homes that sold each year increased before dropping off drastically in 2008 and then hitting a low of only 1,812 units in 2009.

So let’s put this all into perspective.  We are basically looking at two separate markets, 2007 and before and then 2009 going forward.  We will just chalk 2008 up as a transition year for Louisville homes for sale.   The 2007 market is the one that was marked by too many people buying homes, especially people who weren’t even properly qualified for decent loans.  The second market, 2009 going forward, has had to recover from the brutal slide endured after the end of the previous market, and it looks like we might finally be turning the corner and getting to a point that more closely resembles a neutral market.

But it’s going to take a while, we aren’t there yet.