Are you a home seller who has reached his pricing pain threshold and swear you just can't drop the asking price on your home another nickel? Imagine how these sellers feel, having already dropped by $5 million or more? OK, we're guessing there's not a lot of sympathy aimed at the rich guys. But perhaps there is some small comfort in knowing that even those occupying the top berths of the MLS are likely being advised by their agents to go lower, lower, lower still.
As for the rest of the market, the just-released Trulia study showed a slight decrease in the number of home sellers lowering their prices. A year ago, 23.6% of the homes on the market had seen at least one price reduction, and now it's just 22%. The average price lowering is about 10% off the original asking price.
Lowering until it hurts? Homes where price cuts exceed $5 million
Our luxury-home owning friends are cutting prices along with the rest of the market; 21% of homes listed at $2 million or above were reduced in price an average of 14% off the starting price. Only 1.1% of the homes in America are worth more than $1 million, according to RealtyTrac and the 90-day delinquency rate on mortgages of $1 million or more hit a high of 13.3% in February (compared to the overall rate of 8.6%), according to First American CoreLogic.
Studies like this one from Trulia can be head-scratchers though. Does it mean that prices have bottomed out and home owners think they can get their higher asking price? Or does it mean that the rosier spring sales figures (sparked by the now-expired tax credits) caused sellers to think their homes are fairly priced and don't need to come down any more?
Pete Flint, CEO of Trulia, says it much prettier than I do. "For the unforeseen future, buyers will continue to have the negotiating power and I expect sellers will get more aggressive with price cuts throughout the summer." In other words, buyers are still in the driver's seat and if you need to unload your house, just get past the hand-wringing and lower your price already.
But you've got to love those gamblers in Las Vegas. The study found that Vegas home sellers were the group that bet on prices not dropping further. Almost 70% more of them held firm on their price over the number who dropped last year. Maybe there's just something in those all-you-can-eat buffets that clouds their judgment? It sure couldn't be that the Vegas inventory of homes for sale has come close to being depleted.