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As home price reductions continue to level off, the housing market is beginning to show signs of stability, according to a recent report by San Francisco-based ""Trulia, Inc."":http://www.trulia.com/, a comprehensive real estate Web site.
[IMAGE]Findings of the report showed that as of February 1, 2010, 21 percent of homes currently on the market in the United States experienced at least one price cut. This represents the second straight month of home price reductions at this level, which is the lowest it has been since Trulia started tracking price reductions in April 2009.
The low level of price reductions marked a significant decline from November 2009 when 26 percent of homes had at least one price reduction. While the average discount for price-reduced homes continued to hold at 11 percent off of the original listing price, the total dollar amount cut from home prices fell 19 percent to $22.6 billion in February compared with $28.1 billion in November.
Of the top-50 major U.S. cities tracked by Trulia, only seven had price reduction levels at 30 percent or higher in
[COLUMN_BREAK]February 2010, down from 21 in November 2009. In addition, eight cities--five of which were from California--saw a decline in price reductions by more than one-third.
""Seeing lower levels of price reductions nationally is an early indicator that we may be getting closer to a healthier real estate market,"" said Pete Flint, Trulia co-founder and CEO. ""So far this year, we've seen more engagement by home buyers than we've ever seen before on Trulia, and it shows no sign of slowing down.""
With extension of the homebuyer tax credit on the horizon, this positive trend may not continue. According to Flint, last year's experience indicates that sellers may begin to panic by reducing prices ahead of the deadline. Corresponding directly to the timing of the original November 2009 deadline for the tax credit, national price reduction levels peaked at 26 percent from September through November of last year. However, in the months following the extension of the credit, price reduction levels hit all-time lows in Trulia's report.
""We will be tracking this closely during the next few months to determine the overall health of the real estate market heading into the traditional summer buying season,"" Flint said.
Despite the overall leveling off of price reductions, luxury homes--those listed at $2 million and above--continued to bear the brunt of discounts. According to Trulia's report, homes in the luxury market have been reduced by an average of 14 percent, notably higher than the average discount of 10 percent for homes priced less than $2 million. What's more, luxury homes represent less than 2 percent of all current listings on Trulia but are responsible for 25 percent of the $22.6 billion in home price reductions.
