Buyers Market: Homeowners Cut Prices on 50% of Homes for Sale

09-05-2010 • HousingWatch.com

Homeowners are slashing prices more drastically and more frequently, according to recently released data from ZipRealty. The average price reduction is now 7.1 percent of list price. List prices dipped about $19,000 in August compared with July, across the 26 markets studied. On average, sellers made two price cuts during that time. Seven cities saw price reductions on more than half of their inventory, with Jacksonville, Phoenix and Minneapolis on top with 55 percent, 54.4 percent and 52.4 percent, respectively. "Earlier in the year we saw sellers being aggressive with their pricing, but not reducing as much," says Leslie Tyler, vice president of marketing for ZipRealty. "What we are seeing now is that the trends are reversing." With the seeming desperation of home sellers, and the continued drop in mortgage rates, buyers are in a very good position. But the plunging rate at which buyers are applying for mortgages tells a different story, which might explain sellers' attitudes.

1 Comments in Response to Buyers Market: Homeowners Cut Prices on 50% of Homes for Sale

Comment by Ross Wolf

Entered on: 9/6/2010 7:50:49 AM

Cutting your home’s selling price 7.1% is no big deal when you consider landlords of commercial retail property are now slashing their selling price 50-60%. A retail tenant now paying e.g., $2,800 a month to rent a retail building and land that costs $400,000 ten years ago can buy that property for $175,0000-$200,000 and pay just $1,500 a month in loan payments 100% financing to purchase the property. Things have turned upside-down. Most Landlords that ten years ago paid $400,000 for a retail commercial property got a 50% purchase loan ($200,000). When tenants leave, don’t extend their lease, landlords can’t find a tenant who will pay the prior amount of rent; exponentially landlords are defaulting. Making matters worse, after a commercial property landlord loses his or her property to foreclosure, the owner will have to pay a 25% federal tax on all straight-line deprecation taken prior. After the November elections the situation is expected to worsen. Commercial brokers are now attending classes that instruct agents how to deal with lenders in short sales of commercial properties similar to home short sales after foreclosure.

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