What Does the Recent Rash of Price Reductions Mean to the Real Estate Market?

Thursday, August 23, 2018   /   by Nicole Solari

What Does the Recent Rash of Price Reductions Mean to the Real Estate Market?


What Does the Recent Rash of Price Reductions Mean to the Real Estate Market?



Last week, in a new report from Zillow, it was revealed that there has been a rash of price reductions across the country. According to the report:



    • There are more price cuts now than a year ago in over two-thirds of the nation’s largest metros

    • About 14% of all listings had a price cut in June

    • Since the beginning of the year, the share of listings with a price cut increased 1.2%

    • This is the greatest January-to-June increase ever reported, and more than double the January-to-June increase last year


Senior Economist Aaron Terrazas further explained:



“A rising share of on-market listings are seeing price cuts, though these price cuts are concentrated at the most expensive price-points and primarily in markets that have seen outsized price gains in recent years.”


What this DOESN’T MEAN for the real estate market…


This doesn’t mean home values have depreciated or are about to depreciate.


A seller may put a home worth $300,000 on the market for $325,000 hoping a bidding war will occur and an overanxious buyer will pay more than its actual value. That has happened often over the last few years. If the seller gets no offers and reduces the price to $300,000, it doesn’t mean the home dropped in value. It is still worth $300,000.


Home prices will continue to appreciate over the next 12 months. In this same report, Terrazas remarks:



“It’s far too soon to call this a buyer’s market, home values are still expected to appreciate at double their historic rate over the next 12 months, but the frenetic pace of the housing market over the past few years is starting to return toward a more normal trend.”


What this DOES MEAN for the real estate market…


This does mean that sellers should be more conservative when it comes to the price at which they list their homes – especially sellers in the upper end of each market.


Sellers have been listing their homes at inflated prices hoping a super-hot market will deliver a buyer willing to pay virtually any price to ensure they don’t lose the house. That strategy has worked somewhat successfully over the last two years. However, the time that strategy would have worked may have passed.


Again, quoting Aaron Terrazas in the report:



“The housing market has tilted sharply in favor of sellers over the past two years, but there are very early preliminary signs that the winds may be starting to shift ever-so-slightly.”


Bottom Line


Prices are not depreciating. However, if you want to sell your house quickly and with the least amount of hassles, pricing it correctly from the beginning makes the most sense.


  real estate, home ownership, homebuyers, real estate agent, homes for sale, buying, selling, home inspection, property taxes, escrow, selling tips, solano county, solari group, staging, for sale by owner

The Solari Group
Nicole Solari
DRE# 02014153

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4820 Business Center Drive, Ste 140
Fairfield, CA 94534
707-486-5400

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Napa, CA 94559
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IDX Content is provided via the Internet for consumers’ personal, non-commercial use. Variable Price’ indicates the seller is willing to entertain offers within a Listing Price Range. All measurements and all calculations of area are approximate. Information provided by Seller/Other sources, not verified by Broker. All interested persons should independently verify accuracy of information. Provided properties may or may not be listed by the office/agent presenting the information. IDX provided by Commissions Inc. Data last updated:November 18, 2019