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Homesellers Cut Prices to Accommodate Prospective Buyers

by Houston Agent

Homesellers continue to discount their asking price in an attempt to entice buyers to move towards a purchase according to a report issued by national real estate brokerage ZipRealty.

Businessman sawing a dollar sign

Image by Beau Lark/Corbis

ZipRealty’s monthly Price Reduction report, which is generated from a review of MLS-listed properties in 26 markets, shows that inventory is up a modest 2.81 percent from January 2010, but the total number of homes where sellers have cut the asking price at least once was up 17.6 percent. This double-digit growth in discounted homes may be another indicator of a sluggish market.

“In more than half of the surveyed markets, sellers are averaging at least two reductions in price,” says John Oldham, director of marketing for ZipRealty. “Inventory has grown throughout much of the year; as sellers face the pressure of more buying options, they seem to be discounting to attract buyers resulting in list prices being cut for over 46 percent of the homes.”

From a month-to-month view, January saw fewer discounted homes for sale than December, with the number of price-reduced homes on the market dropping 4.1 percent and total inventory down 2.1 percent. Although price-reduced inventory outstripped last year’s levels, the percentage slipped from 47.2 percent to 46.2 percent, making it the second straight monthly decline.

The report also found almost no change in the median list price from last month, dropping less than $500 (.2 percent), compared to about a $9,000 decline (3.9 percent) from November to December. While there are still markets where the median list price dropped significantly, such as Orange County, Calif., which saw a $5,000 drop in list price, some markets saw prices nudging back up, such as Miami, Fla., where the list price increased from $180,000 to $185,000 in January.

Highlights of ZipRealty’s January index include:

  • The number of price-reduced homes on the market is up 19.8 percent of January of 2010
  • Price-reduced homes fell faster than inventory, with the number of price-reduced homes falling 4.1 percent compared to a 2.1 percent decrease in overall inventory in January as compared to December
  • The median reduction amount dropped 1.7 percent to $19,088
  • The median list price dropped by .2 percent from December to $225,015, and the average percentage of price reduction amount to list price fell to 7.8 percent in January
  • In four major markets, more than half of homes on the market in January included at least one price reduction, down from nine markets in December. Those markets are Phoenix, Jacksonville, Orlando and Baltimore.
  • Homes listed for sale in Florida continue to be discounted by the largest percentage of original list price nationwide with Orlando leading (12.5 percent), followed by Jacksonville (12.1 percent) and Miami/Ft. Lauderdale/Palm Beach (11.9 percent)

Markets with the largest median price reduction in absolute dollars were:

  • San Francisco – $32,500
  • Orange County, Calif. – $31,000
  • San Diego – $29,100
  • Miami/Ft. Lauderdale/Palm Beach – $25,000
  • Seattle – $25,000

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