Price reductions remaining low
With only 21% of homes reporting at least one price cut of their original asking price during the last month, fewer sellers are slashing their home prices, according to Trulia.com who reported 22% in December 2009. The average reduction remains at 11% across the nation.
While the South experienced 20% of listings having price reductions, the West, Midwest and Northeast weren’t too far behind at 22%, showing that currently, no region is massively outperforming any others. Locally though, Jacksonville, FL saw 36% of their listings with price reductions and Los Angeles, CA dropped 46% with only 14% of homes reducing their prices.
According to Trulia, “Luxury homes (those listed at $2 million and above) continue to be hit the hardest by price reductions with the average discount rising to 15 percent for the first time since Trulia started tracking in April 2009. Additionally, luxury homes represent less than two percent of all current listings on Trulia, but are responsible for 24 percent of the $21.2 billion in home price reductions. The average discount for homes priced less than $2 million continues to hold at 10 percent.”
While these stats are interesting, it isn’t always applicable to agents on the ground. Nanette Labastida with Austin Fine Properties noted, “I don’t take price reductions into consideration much when working with a buyer- DOM [days on market] and comps are the top two things I consider,” which are more common influential reference points than price reductions.
For those interested in the data, however, it is of note that Texas cities account for 12% of the Top 50 U.S. Cities experiencing price reductions, although the price reductions were all 9% or under. California accounts for 16% of the Top 50 with price reductions at 9% or over. Below is the list of the Top 50 including the total amount of reductions per city:
Shadow inventories are up 55% over last year, unemployment remains around 10% and mortgage apps are the lowest since last summer, so this piece of the puzzle shows stability in the housing industry but we have several other pieces that have to fall into place before we see a real recovery.