Home Price Reductions Jump 10% as Homebuyer Tax Credit Expires
Original Post Date: May 12, 2010
By: Brittany Dunn
Marking a 10 percent increase from April, 22 percent of listings on the market as of May 1, 2010 experienced at least one price reduction, San Francisco-based Trulia reported Wednesday.
According to Trulia, the total dollar amount slashed from home prices was $25 billion, and the average discount for price-reduced homes continued to hold steady at 10 percent off the original listing price.
“With more than a year of the federal government’s involvement, we are now re-entering the free market system. As we readjust to the free market, we expect to hit
turbulence in some markets,” said Pete Flint, Trulia co-founder and CEO. “We won’t know the true severity of the tax credit expiration until the conclusion of the peak home buying season in the summer months. Only then will we have a better sense if the U.S. housing market can stand on its own two feet.”
Trulia said many metro areas experienced major increases in reductions. The most significant was seen in Omaha where price reductions surged 62 percent. San Diego was the next highest, posting a 39 percent increase in price reductions.
In addition, Trulia said 12 of the top 50 cities across the U.S. saw price reduction levels at 30 percent or more, up from just five cities the previous month. Price reductions were the highest in Minneapolis, where 40 percent of home listings experienced at least one price cut.
The last time Minneapolis reached the 40 percent mark was in December 2009. According to Trulia, no other major U.S. city has reached a level this high since it began tracking home price reductions in April 2009.
Price reduction levels for luxury homes—those listed at $2 million or above—continued to hold steady from last month with an average discount of 14 percent, Trulia said.