With home prices beginning to flatten in many areas around the country, home sellers are slowly gaining ground in their quest to hold on to the asking price.
A new report from Trulia.com finds that of all homes on the market today, 21 percent have seen at least one price reduction. That's the second straight month that percentage has declined. Total home equity slashed dropped 14 percent, from $24.7 billion in December to 21.2 billion in January.
The South continues to improve the most with 20 percent of homes seeing price reductions. All other regions stand at 22 percent.
“Historically low interest rates currently available and tax credit incentives are the ultimate price reductions for home buyers. As rates rise throughout the course of the year, buyers will need to adjust their purchase price ceiling,” says Trulia co-founder and CEO Pete Flint.
Los Angeles, CA and New York City are seeing the biggest improvements in the number of sellers reducing prices, but the luxury market is still being hit hardest. The average price discount on a luxury home (those listed at $2 million and above) is 15 percent, the highest since Trulia began tracking price cuts in April, 2009. The average price discount on homes under $2 million is 10 percent. While luxury homes make up just 2 percent of the total listings currently, they make up 24 percent of the total dollar value of price reductions.
While the numbers look promising now, recent data showing a slowdown in sales and rising foreclosures could put additional pressure on home prices. Government stimulus in housing in the form of the tax credit and lower mortgage interest rates will phase out by Spring, and experts believe a double dip in home prices is a real possibility.