The sobering trend of asking price reductions on residential real estate is unlikely to reverse anytime soon, with a large number of homes are expected to hit the market in the period ahead. Already a fourth of homeowners have lowered their asking price in the past year, at an average of 10%, with luxury properties accounting for a disproportionate amount of that reduction. See the following article from HousingWire for more on this.
The sellers of more than 25% of homes currently on the market in the US reduced the asking price of their home at least once in the past 12 months, according to San Francisco-based real estate search firm Trulia.
The national average price reduction was 10%, but more than 40% of the top 50 major metro areas Trulia studied saw average price reductions above 30%.
The Northeast was the region with the highest rate of price reductions, with 29% of homeowners reducing their asking price. The Midwest ranked second, with 28% of homeowners reducing prices, followed by the West (25%) and the South (24%).
“With mortgage rates still low and the expansion of the tax credit to trade-up buyers, we could see significant inventory — both new and shadow inventory — hit the market during the next four to six months,” said Pete Flint, Trulia co-founder and CEO. “Inventory levels this quarter are poised to be atypical of a normal real estate market, which could create tremendous pressure on sellers to price their homes competitively and move their property before the tax credit expires on April 30th.”
Individual markets that experienced noticeable rates of price reduction include Kansas City, Mo., which saw 59% of homes with reduced prices, Colorado Springs, Colo. (43%), Omaha, Neb. (39%), Louisville, Ky. (37%), and Milwaukee, Wis. (30%).
Markets that experienced the greatest asking price declines include Las Vegas (34%), San Jose, Calif. (25%), San Antonio, Texas (18%), Los Angeles (16%) and Oakland, Calif. (16%).
Luxury homes — those listed at $2m or above — represent less than 2% of market listings, but with an average 14% price reduction, represent $28.1bn in price declines, or about 25% of all home price reductions.
This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage and real estate news site.