Sellers Cut Fewer Listing Prices as Home Price Declines Slow
Fewer US homes for sale experienced listing price reductions this month, according to online real estate market Trulia.com. It's further indication of a leveling out in listing price declines amid government stimulus to buy homes. A new low of 19% of listings currently on the market experienced a price cut as of March 1, 2010, based on Trulia's database of live listings. Sellers slashed $21.6bn off of listing prices. It marks a 10% drop from the previous month and the first time price reduction levels dropped below 20% in almost a year -- since the company began tracking in April 2009. “Consumer engagement on Trulia remains at an all time high, but home sales have dropped nationally during the past few months because there has been a lower sense of urgency to ‘buy now’,” said Pete Flint, Trulia co-founder and CEO, in a press statement. “As we get closer to the government incentives running out, we expect price reductions to increase as sellers begin to feel the pressure to lure buyers in, in advance of the tax credit expiration.” Price-reduced listings are an average 11% below the original listing price, with the multi-million-dollar listings suffering the largest hits at an average 14% below original listing price, Trulia found. The latest data reinforces a recent downward trend of listing price reductions beginning at the new year. The rate at which home prices are dropping may be slowly coming to a halt across the United States, with analysts at Barclays Capital predicting only a 4 or 5% dip left to go before stabilization. But the rate of appreciation on the back side of that bottoming out is likely to “muddle along for the next few years,” they said last week in a letter to investors. Even with the leveling of price declines, house prices in the United States are nearly 20% undervalued, especially in the states of California, Nevada, Michigan and Ohio, when compared to global markets, according to a report from independent macroeconomic research consultancy firm Capital Economics. Economists also note prices on a national level increased on average 3-6% in 2009. But that trend will likely end, with prices falling another 5%, unless the government extends the homebuyer tax credit. Write to Diana Golobay.