[Trulia] Price Reduction Report – November 2010
Posted by Jonathan J. Miller -Thursday, November 18, 2010, 11:25 AM
3 Comments
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Trulia released its Price Reduction Report for November 2010.
…”Price reduction increases in many large U.S. cities can be attributed to the basic principle of supply and demand – on that score, buyers clearly have the advantage this holiday season,” said Tara-Nicholle Nelson, consumer educator, Trulia.com. “The market is flooded with distressed homes that are priced to sell and individual sellers are having a tough time competing. These dynamics, along with a shallow pool of active buyers, are leading to increases in price reductions.”…
My own take on the 27% price reduction is less dramatic and perhaps suggests a hint of seasonality returning to the market. This is a new metric with about 1.5 years of data so historical perspective without the influence of a federal tax credit is not available to us yet. The fact that the amount of price reductions is similar to the same period a year ago is pretty interesting. The sharp drop this spring is clearly correlated with the April 30th expiration of the tax credit.
As we move forward with this metric, I suspect seasonal patterns will emerge. I would expect this metric to rise over the summer months and during the last two months of the year which are the periods following the “two-hump camel” of rising sales in the spring and fall. Sellers realize they miss the market and drop their price.
Top 5 cities with highest number of price reductions
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Top 5 cities with lowest number of price reductions
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November 2010 Trulia Home Price Reduction Report [Trulia.com]
These are very interesting stats. Thanks for sharing.
What does this really tell us, though?
It’s easy to put up a listing for an unrealistic asking price. I suspect the number of price cuts reflects the marketing strategy of sellers as much as it does the actual market conditions.
If your strategy is to price your house right, then you shouldn’t need to cut the price. If your strategy is to see what you can get away with, and negotiate down later, then you might have to lower the price.
Agents have also been known to post listings and intentionally lower the price so they continue to come up in price reduction search results.
What does it mean that Detroit and Miami are at the bottom? I sometimes think this stat on price reductions is an answer in search of a question.
Hi, there. A nice post. I think that the current USA real estate market can be easily termed as the buyer’s market. The mortgage rate is low (4.23 percent for thirty year fixed mortgage, as on October 2010). The market is full of foreclosed properties and one can end up getting a distressed property at really low price. Sellers are forced to reduce their prices in order to gain an edge over others in this competitive market. It is the buyers who ultimately have the advantage in the present condition.