Housing Price Reductions this Fall

December 9, 2009

by Scott Sambucci

3 comments

Came across today’s article in DSNews – “Fewer Home Sellers are Cutting Prices:  ZipRealty” – referring to Zip Realty’s press release yesterday. And well, being data geeks, the old “trust but verify” instinct kicked.   From the article:

In November, fewer sellers in 27 major markets across the nation reduced home prices, and those who did, reduced prices by less in November than in October, according to a recent report by ZipRealty

You know what?  We’re seeing the about same thing using our Altos-20 Composite (this composite tracks the same 20 markets in the S&P/Case-Shiller Home Price Index). Here’s some eye candy:

Percentage of Active Listings with at least one price reduction in the most recent 90-day period and the Magnitude of price reductions from original list price

Percentage of Active Listings with at least one price reduction in the most recent 90-day period and the Magnitude of price reductions from original list price

We noted in a November article that there’s price convergence among new listings and listings absorbed.  This trend is continuing into December:

Price convergence - Dec 09

One noticeable trend is the lack of trend for new listings – new sellers are entering the market every week at the same price level, and have been doing so since the early Fall.  This is likely due to seasonal activity constraints despite the previously anticipated end of the home buyer tax credit that’s been recently extended.

Zip Realty mentions a few specific markets, so for those that haven’t reach the middle of their Tootsie Pop, here’s a few more charts based on the article:

In Orlando, Florida; Jacksonville, Florida; and Chicago, Illinois, one out of every two homes included at least one price reduction.

We’re not seeing the numbers quite as high as 50%, but certainly the numbers are elevated.  And… three key trends we see here:

  1. The number of homes with price reductions remains elevated – over 1 in 3.  (Hey Mr. Seller – Look to your left. Look to your right. One of you have reduced your price in the last 90 days…)
  2. But… the number of homes with price reductions is down from their previous highs of over 50%
  3. But… that number is flattened out so the market gains are slowing as we reach the end of the year.
     Percentage of Homes for sale in Orlando, Tampa and Jacksonville, FL with at least one price reduction in the most recent 90-day period

Percentage of Homes for sale in Orlando, Tampa and Jacksonville, FL with at least one price reduction in the most recent 90-day period

The survey found that homeowners in South Florida reduced list prices by the largest percentage at 16.01 percent

Yep – That’s about the number we’re seeing:

Magnitude of Price reductions of active listings

Magnitude of Price reductions of active listings in Miami Metro Area

San Diego, Los Angeles, and Denver made up the three markets with the lowest percentage of price-reduced homes, according to ZipRealty.

Hmmm…. Can’t say we agree 100% on this one, but close. San Diego and Los Angeles have definitely come waaaaaay down, but Denver seems elevated:

Percentage of Homes for sale in San Diego, Los Angeles, and Denver with at least one price reduction in the most recent 90-day period

Percentage of Homes for sale in San Diego, Los Angeles, and Denver with at least one price reduction in the most recent 90-day period

All in all, the markets are starting to show slowing effects on price, but that doesn’t mean that things are necessarily moving into positive ground – more like they’re moving less negatively which is a positive sign all things considered.

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