Now is the bargain real estate season: asking home prices typically hit their seasonal low point from November through January. This winter, however, home price discounts are harder to find. Among all non-foreclosure homes for sale on Trulia in early January, 33.6 percent of homes were priced lower than their original listing price. (For homes originally listed more than six months ago, we compared the current price to the price six months ago, not the original price.) One year ago, in early January 2012, 36.7 percent of homes for sale were marked down from their original listing price.
However, the national average of 33.6 percent hides huge local differences. In January 2013, the share of homes with price discounts ranges from just 15 percent in Oakland, Calif., to 48 percent in Springfield, Mass. Among markets with the fewest reductions today, Miami and Fort Lauderdale stand out as the two locales that also had relatively few reductions one year ago.
Springfield, Mass., on the other hand, has the most price discounts in the country, followed by Hartford, Conn., and Omaha, Neb. Of the 10 metros with the highest share of price reductions, five are in New England. The rest are in the Midwest or nearby. Most of the markets with lots of markdowns at the start of 2013 had even more price reductions at the start of 2012. In fact, among the 100 largest metros, 83 have fewer price discounts now than one year ago.
What explains why some metros have few markdowns, while others have many? Two factors stand out among markets with fewer reductions: bigger price gains and a lower vacancy rate. In metros where prices are rising, asking prices are less likely to start out too low: Oakland, Las Vegas, and Miami all had big price gains in 2012, according to the December Trulia Price Monitor. In metros with low vacancy rates, buyers are competing with each other for the few available homes on the market, so sellers don't need to lower prices to attract buyers: Ventura County, Calif., for instance, had only a 0.9 percent year-over-year increase in prices in December 2012, but has among the lowest vacancy rates in the country, which means sellers don't need to drop prices to attract interest. Overall, a decline in price reductions is yet another sign that the housing market is tightening. Take a closer look at the 10 markets where price reductions are everywhere.
Jed Kolko is the chief economist for online listings site Trulia. This article originally appeared on the Trulia Trends blog.
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