Top spots for home price reductions

Checking in on the changes over at the Redfin blog, you'll see they've crunched the numbers on which Los Angeles area towns and cities are experiencing the most (and least) price reductions before a home is either sold or taken off the market. Follow me now, this doesn't mean that percentage was knocked off the price.

Making their Top 10:

El Segundo, 65%
West Hollywood, 63%
Westlake Village, 60%
La Verne, 56%
Mayflower Village, 56%
View Park-Windsor Hills, 55%
Charter Oak, 55%
Bell Gardens, 54%
Willowbrook, 54%
Signal Hill, 54%

Most of the cities with price reductions, the website reports, were fairly close to L.A., which saw 44% of price-reduced homes taken off the market. Of note: Downtown L.A. condos are experiencing the fewest price reductions in the county, at 15% before leaving the market.

What does it all mean for those in the market to buy? Redfin data junkie Tim Ellis offered this:

There are no particularly noticeable patterns in the data between neighborhoods with many price reductions and those with few. If you’re looking for a home, be sure to look around at nearby neighborhoods, where there may be significantly more price reductions.

As for you sellers, get ready to reduce that price.

--Lauren Beale

Thoughts? Comments?

Photo: The Bunker Hill area of downtown Los Angeles. Credit:  Brian Vander Brug / Los Angeles Times

Comments

[Billy]

I'm surprised Chino Hills is not amongst the top of the list. I can understand why West Hollywood is on there though, their prices skyrocketed over 20% each year during the boom. Time to pay the piper, and I'm sure there's more lower prices on it's way. This site tracks sales prices:

http://trendshousing.com

[Chuck Ponzi]

Is it really considered a price reduction when you lower the price $5 every 5 days?

Keeps the listing from being stale... or so the agent thinks.

Chuck

[Steve]

This is actually great news, LA may become the most affordabe area in the country.

[Jonah]

I'm surprised about downtown...there seems to be a lot of inventory.

[latesummer2009]

Listing prices are an indicator, but not as important in this part of a RE Bear Market Cycle. You can ask any price you want, but what matters are:

1) Total Number of Sales
and
2) Total Sales Volume

Measured (Y.O.Y) Year over Year. Any RE office manager and agent knows this.

Especially now, as we move into another critical phase of the Real Estate Meltdown. JOB LOSSES. The Westside will feel more pain, as sales dry up even more, when the dwindling pool of qualified buyers gets smaller and smaller.

http://www.westsidermeltdown.blogspot.com

[Name]

Buyers: Don't just look around at nearby areas, take that broader comp sheet of sales with you when you go to make an offer. Use a smart conversation about volume trends when you speak to the other side to explain that any offer is a good offer and should be considered in light of the marketplace regardless of what their asking price is. Be aggressive in your bids and help sellers see why it makes sense to start closing the spreads by lowering 'this neighborhood is doing fine' asking prices. Also remember to leverage DOM and sell-side broker who only gets paid when the deal closes to your advantage throughout the process.

Just imagine how happy that seller asking $1mm now would be if they'd accepted the offers for $1.1 back when their ask was $1.3...

[Keith]

If you move this blog one more time, nobody will find it anymore. Just what the industry ordered.

[nirad]

Another interesting tidbit i found on the redesigned Redfin: the average list price in LA is $300/sq ft; the average selling price is ~$250/sq ft. So a typical 2,000 sq ft house is listed at $600,000, but will likely sell for $500,000. That is the largest difference between asking and selling prices in the last 2 years, and the discrepancy appears to be growing. If you're wondering why listing prices aren't coming down faster, here's you answer: sellers are increasingly resistant to facing reality.

http://www.redfin.com/city/11203/CA/Los-Angeles

[Chris Schreiber]

You are not alone in Southern California, we are seeing similar trends up here in the Northwest. However, I think several of the responses were right on ... I'm not as interested in the list to sale price ratio as I am in the actual closed sale indications. In other words if the list prices were climbing by 20% per year, but sales indications showed little or no growth or even decline, that's much more important to me than the list to sale ratio.

I hate to say this, but is this a case of realtors giving in on list prices just to get the listings? That certainly happens often up here.

[dclogang]

"If you're wondering why listing prices aren't coming down faster, here's you answer: sellers are increasingly resistant to facing reality."

And when they have to lower the price even more to sell the house.. they will lose even MORE money than they would have by simply pricing it correctly in the first place.

This is because the buyers know that they price was reduced and they know at that point that the seller is becoming desperate to sell. The seller often times makes less than they would have had they priced it correctly (lower) in the first place.

It's best to offer the house way under what it's worth and then have buyers go into a bidding war. So, sellers... LOWER YOUR PRICES to realistic or even outragousely lower price.

that is all.