Markdowns Increase on Homes for Sale

By:: Kara Johnson | December 10, 2010

Price reductions on homes listed for sale increased dramatically over the past year, with nearly half of them marked down at least once since going on the market.

The percentage of reduced-price homes on the market was up 24.1 percent in November, compared to the same time last year, according to figures released today by ZipRealty. Some of the most dramatic increases were experienced in major California markets such as San Francisco and Orange County, where the rate of marked-down listings essentially doubled over the preceding 12 months.

The company reports that 48.1 percent of all homes for sale, based on its survey of 26 major markets, have seen at least one price markdown. Meanwhile, the inventory of homes for sale fell for the second consecutive month, falling 3.8 percent in November.

“Typically, November is a slower month for sales,” said John Oldham, Director of Marketing for ZipRealty. “Inventory peaked in September and has dropped over the last two months. The increase in price-reduced listings is evidence that sellers are still trying to find the right price point to get the property to sell.

For homes taking markdowns, the average list price reduction in November was 7.6 percent, an increase of 1.7 percentage points from the month before. The median list price was $234,484, down 2.8 percent from October. The company suggested that with the seasonal softness in the market, many homeowners may be waiting until after the holidays to sell.

California markets show biggest markdowns

The biggest price reductions were all in California markets, one of the latest signs that the yearlong mini-recovery in the housing market is slowing down. The median markdown on San Francisco homes for sale was $35,050, leading the entire survey, followed by Orange County at $32,450 and San Diego at an even $30,000.

The number of marked-down homes for sale in San Diego was up 108 percent compared to November 2009, while San Francisco saw a 100 percent increase. Price-reduced properties were up 91 percent in Orange County and 79 percent in Los Angeles.

The only other market were price-reduced inventory increased by more than 75 percent was Las Vegas, Nev.

Nearly two-thirds of the 26 markets markets surveyed showed an average of two markdowns per listing. In 11 of the 26, more than half of all listings had experienced at least one markdown.

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