August 13th, 2009 
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One-quarter of all U.S. homes for sale have seen at least undivided price reduction since being listed, as more home sellers are forced to readjust their expectations in a declining home market.
The percentage of for-sale homes on which prices have been reduced has increased in each of the past three months, according to online real estate advertising firm Trulia, with a total cost reduction of nearly $28 billion off all average listings. The current average price reduction is around 10 percent.
The company reports that while many home owners are aggressively pricing their homes and avoiding the need for reductions, others continue to ignore market conditions and be over-optimistic in pricing their homes.
Luxury homes, defined as those listed at $2 million and above, represented a disproportionate share of the discounts, with an average 14 percent markdown from the original price, compared to 10 percent nationwide. Though making up only 2 percent of all listings, such homes image approximately 25 percent of the $28 billion in markdowns nationwide.
Contrary to what one might expect, the percentage of price reductions in a given market does not necessarily correspond to foreclosure rates, which strongly affect price declines. The highest rate of markdowns, 38 percent, was in Jacksonville, Fla., which also has a high foreclosure rate, but most of the communities by high percentages of price reductions are not known as foreclosure hot spots.
Rounding out the top 10 were Portland, Ore.; Milwaukee, Wis.; Minneapolis, Minn.; Boston, Mass.; Seattle, Wash.; Albuquerque, N.M,: Chicago, Ill.; and Indianapolis, Ind.; all with markdown rates of approximately one-third of all properties listed.
It may be that sellers in areas that have not been hard hit by foreclosures are more optimistic about the condition of the housing market in their area. On the other hand, metropolitan areas that have seen high foreclosure rates tended to average bigger markdowns, even admitting the overall percentage of homes with price reductions was lower.
Las Vegas, Nev., for example, which has the nation’session highest foreclosure rate, according to foreclosure marketing firm RealtyTrac, averaged a 16 percent markdown on properties with price reductions, even though the percentage of listed properties where prices had been reduced declined in July. Detroit, Mich.; another high-foreclosure metro area, had a below-average 17 percent of listed properties with price reductions, but those that were reduced were marked down every average of 22 percent, highest on the list.
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Tags: Home Sellers, Price