Falling inventories are helping home sellers gain a negotiating edge over buyers for the first time in many months and the result is a stabilizing of the frequency and amount that sellers are discounting prices as the housing market shows significant signs of recovery?at least for now.
In August, buyers paid a median $6,525, or 3 percent, less than the last listing price on all homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July. In January 2009, buyers were paying 4.5 percent less than last listing price, a median of $10,096, according to a new market study by Zillow to be released Tuesday.
Many homebuyers are still paying less than the listing price. One out of four (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of October first. The median reduction in August of properties where sellers reduced the price was 6.6 percent off the original listing price.
Florida homebuyers in August had the most negotiating power in the nation, with buyers in the Vero Beach metropolitan statistical area (MSA) paying 8.9 percent, or a median $20,974, less than the last listing price. Buyers in the Naples MSA paid 8 percent less than list price. The Naples, Daytona Beach, Miami-Fort Lauderdale, Ocala, Lakeland, Punta Gorda, Melbourne, Gainesville, Tampa, Jacksonville and Fort Myers MSAs also ranked, in that order, as the top markets for negotiation.
In two California markets, however, buyers actually paid more than asking price during August. In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price. In the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.
“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries.
“Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August,” Humphries said.
However, another study by the national real estate brokerage ZipRealty found that for the fifteenth straight month inventory continued to decline though September in the 26 metropolitan areas where ZipRealty operates.
Among those markets, ZipRealty found that Los Angeles continues to show signs of stabilization with falling inventory and rising list prices. Inventory in Las Vegas continues to decline but the median list price remained unchanged for the sixth consecutive month.