Sellers understandably want the highest possible price for their homes.
But wishing for an impossible price doesn’t mean they will get it. In fact, wishing only means they won’t get it.
In the last month, prices were cut on 810 condos and co-ops in all of Manhattan. A total of 329 of the reductions was for one-bedroom units and 214, for two-bedroom apartments.
The average price for a one-bedroom condo or co-op was $731,261 and the median, $675,000. For two bedrooms, the respective prices were $1,438,056 and $1,295,000.
In the previous month, the number of reductions reached 997.
So, as the summer has progressed and the housing market has shown increased sluggishness, it is clear that sellers have had a reality check. Those who must sell, as opposed to those who merely want to, are coming to grips with current conditions and are, in all likelihood, hoping to catch in their bare hands the knife of what could be a falling market.
|6/22/2010 – 7/20/2010||7/20/2010 – 8/17/2010||Change||% Change|
|Average Listed Price||$1,263,409||$1,252,940||-$10,469||-0.83 %|
|Median Listed Price||$875,000||$868,500||-$6,500||-0.74 %|
|Number of Properties Sold||916||731||-185||-20.20 %|
|Listings Taken Off Market||1,130||965||-165||-14.60 %|
|New Listings||922||891||-31||-3.36 %|
|Contracts Signed||904||727||-177||-19.58 %|
|Listing Inventory||10,457||9,729||-728||-6.96 %|
|Average Price per SF||$1,000||$988||-$12||-1.20 %|
|Listings with Price Drops||997||810||-187||-18.76 %|
In the table above, provided by the OLR broker database, it’s interesting to see how every metric dropped between the first month and the second–actually, four-week date ranges.
Of particular note is the 20 percent plunge in sales (at a time, of course, when seasonality most affects the housing market). Since the age of listings is not given, it is difficult, however, to make much sense of the nearly 19 percent decrease in listing discounts–that is, when they occurred. At the same time, the slight decline in prices may well imply bad news for sellers in the months to come.
Not incidentally, Trulia.com disclosed yesterday that 24 percent of listings currently on the market in the nation as of July 1 underwent at least one price reduction, a 9 percent increase from the previous month.
The total dollar amount slashed from home prices was $27.3 billion, and the average discount has continued to hold at 10 percent from the original listing price.
Twenty-two of the top 50 cities across the U.S. experiencing price reduction levels at 30 percent or more as opposed to just 10 cities in the previous month. Said Trulia CEO Pete Flint:
Sellers are feeling the heat this summer as the economic recovery simmers down and home inventory levels climb. . . The slow start to the summer season is a major concern that we are heading towards a double-dip in the second half of this year.
In a dynamic environment, sellers need to heed their brokers’ advice. Support for reducing the listing price can come from other brokers, too, whose assessments during visits to the property should be taken seriously. Other considerations:
- The home isn’t getting any showings, even though it’s marketed well;
- The home has sat on the market far longer than other homes in the area;
- There have been multiple offers, but they’ve all been significantly under the list price.
In general, these are not happy times for sellers. But the times threaten to be even sadder, and stubborn sellers who cling to their fantasies may well suffer from nightmarish consequences. I don’t envy them.
Licensed Associate Real Estate Broker
Senior Vice President Charles Rutenberg Realty
127 E. 56th Street New York, NY 10022