Homeowners in certain cities are more likely to quickly reduce their price than others. And where are the sellers most resistant to price reductions? New York City, of course.
In many cities across America, home affordability has returned to pre-bubble levels, making real estate look like a bargain (see Top 10 cities for home buyers). But aside from big-time investors snatching up properties at lower prices, few people are actually buying amid high unemployment and tighter lending standards. In fact, in cities outside major metros with high foreclosure rates, sellers this Spring will likely cut their asking price — not once, but twice.
On average, U.S. home sellers will reduce their list prices after about 2.5 months, or 79 days on the market, by 8%, according to a new report by real estate website Trulia.com. After making one reduction, 35% of these sellers will make a second.
Not every city has been enduring the long slog, however. Sellers in America’s 50 largest cities have been more aggressive and quicker to make the first price reduction than the rest of the country, according to Trulia’s analysis of non-foreclosure listings of residential properties between March 2010 and 2011. Minneapolis, MN led as the state quickest to slash prices at an average of 45 days, followed by major cities in California such as Oakland and Sacramento ranging from 49 to 53 days.
Tara Nicholle-Nelson, Trulia’s residential real-estate expert, says the difference in urban areas has less to do with demand than with negotiating tactics. Urban sellers may be more aware that they need to negotiate downward than suburban and rural homeowners and may be able to afford to put the certainty of sale over money. These cities tend to discount their listings by slightly less than the national average at 7% and have a higher probability, 42%, of reducing their listing price again.
Detroit, with an average discount of 19%, led with the nation’s deepest price cuts during the initial listing, followed by other foreclosure hotspots including Miami, FL with 11%, Columbus, OH with 11%, Baltimore, MD with 10%, and Atlanta, GA with 9%. Since these areas are already gravely depressed, the deep cuts could likely have long-lasting impacts on future home values.
And what Trulia calls the most “stubborn” sellers often waiting the longest, 80 days, before cutting the initial listing price, are New York City, followed by El Paso, TX, Charlotte, NC, Cleveland, OH, Raleigh, NC, Louisville, KY, Kansas City, MO and Memphis, TN ranging from 70 to 79 days.