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REALTOR®: Percentage of Homes with Price Reductions Declines in June

Wednesday, June 23, 2010

 A new report found 22 percent of homes listed for sale nationwide experienced at least one price reduction as of June 1 compared with 23.6 percent in June 2009, according to Trulia.com.  The average discount for price-reduced homes remained unchanged at 10 percent of the original listing price. The total dollar amount slashed from home prices was $26.7 billion.

The report from Trulia.com (www.trulia.com), a real estate search engine, states cities in the Western U.S. experienced the largest decreases in price reductions compared with the previous year. Las Vegas led the way with a 67 percent decrease and six California cities (Oakland, San Jose, Los Angeles, Sacramento, San Francisco, and San Diego) experienced a price reduction of 24 percent or more, according to the report.  

"Sellers are optimistic heading into the summer season because of the strong sales figures from the spring. The spring sales were fueled by the expiration of the tax credit and my concern is that this heavy activity is providing sellers with a false state of optimism," says Pete Flint, co-founder and CEO of Trulia. "We are already starting to see rising inventory levels and I believe this will be the story of the summer."

Silicon Valley REALTORS® don't see prices of homes in their region being reduced by much.

"West Valley property and high-end property up the Peninsula have a tendency to be considered a destination rather than a way station," explains Mark Burns, board director of the Silicon Valley Association of REALTORS® and a REALTOR® with Coldwell Banker in Cupertino, one of the region's high-end markets. "People buying in these areas will typically have higher income and therefore, lower ratios for qualifying for loans and putting larger amounts down."

Chris Trapani, broker and co-founder of the Sereno Group in Los Gatos, says he is actually seeing homes priced in the $2.5 to $5.5 million range "come alive" this year.

"We have had probably two to three times the number of sales in the Los Gatos/Saratoga areas in this price range this year than last. Most of these are cash or have significant down payments," says Trapani.

Like Burns, Trapani does not see a significant drop in prices in the high-end market. "There has been some increasing distress at the high-end for the past year, but a larger percentage of homeowners in this price point have owned these homes for 15, 20 years or more and have little or no mortgage, so there will be no large flood of homes in these price ranges hitting the market all at once, as we've seen in the entry level market," Trapani says.
 
Dante Drummond, a REALTOR® with Coldwell Banker in Palo Alto, observes now more than ever, high-end buyers are being conservative in their buying habits and unwilling to take risks with marginal property location or condition. She advises buyers who believe they have found the right property not to wait too long.

In Silicon Valley, the median price continues to rise. The California Association of REALTORS® reports this week that Los Altos, Saratoga, Palo Alto and Los Gatos are among the top 10 cities statewide with the highest median price in June. Los Altos' June median price was $1,500,000; Saratoga, $1,435,500; Palo Alto, $1,293,500; and Los Gatos, $1,087,500.

"As confidence rises due to the improving economy and equity markets, the news about the median will continue to improve as more high-end sales close escrow. This will build on itself," Trapani says.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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