Owners Slash Prices After Tax Credit

Nearly half of home sellers in 26 of the nation’s largest markets slashed prices in May following the expiration of he Federal tax credit April 30, dropping average prices by nearly $2500 according to a monthly review of MLS-listed properties by the national online real estate brokerage ZipRealty.

The same review showed that although there were more price-reduced “for sale” homes in May, the median reduction was $19,240, down slightly (1.06 percent) from April.

“Home sellers may be lowering their list price to help stimulate interest from home shoppers now that the first-time and repeat homebuyer credits have expired,” said Leslie Tyler, vice president of marketing for ZipRealty.

Highlights of ZipRealty’s May survey include:

• More than four out of every 10 “for sale” homes include at least one price reduction - with 43.1 percent of all listed homes across the 26 markets price-reduced, up more than 3 percent compared to April;
• Sellers reduced their list price by 6.8 percent on average in May, which is a decline of .15 percent compared to April, and down from 7.09 percent in March;
• The highest percentage of price-reduced “for sale” homes was in Jacksonville, Fla., where more than half (51.8 percent) of all listings had at least one price reduction. Denver saw the lowest percentage of price-reduced homes on the market in May, with 30.5 percent.
• Buyers in the San Francisco Bay Area continued to enjoy the biggest home price discount in absolute dollars, with a median price-reduction of $39,000 in May.

Separately, Integrated Asset Services, a provider of default management and residential collateral valuations, reported that its benchmark for national house prices gained 0.9 percent in April but its president said prices could weaken with the end of the tax credit.

“Arguably, the housing market is in better shape today than it was a year ago, but it’s reasonable to think federal tax credits have propped up home sales and prices to some degree,” said Dave McCarthy, President and CEO of Integrated Asset Services. “I’m concerned the end of government support could lead to renewed weakening in the market.”

Home buyers who close on a deal by June 30 are eligible for the administration’s credit worth up to $8,000. The deadline for signing contracts was the end of April. Many analysts believe demand may cool after the effect of the tax credit fades, which would put added pressure on the housing marketplace.