Now is the bargain real estate season: asking home prices typically hit their seasonal low point from November through January. This winter, however, markdowns are harder to find. Among all non-foreclosure homes for sale on Trulia, in early January, 33.6 percent of homes were priced lower than their original listing price. (For homes originally listed more than six months ago, we compared the current price to the price six months ago, not the original price.) One year ago, in early January 2012, 36.7 percent of homes for sale were marked down from their original listing price.
However, the national average of 33.6 percent hides huge local differences. In January 2013, the share of homes with price reductions ranges from just 15 percent in Oakland to 48 percent in Springfield, MA. Among markets with the fewest reductions today, Miami and Fort Lauderdale stand out as the two locales that also had relatively few reductions one year ago, in January 2012. In contrast, Las Vegas and the seven California markets that round out the top-10 list all have far fewer reductions today than a year ago: in these metros, markdowns have become much harder to find.
Springfield, MA, has the most price reductions in the country, followed by Hartford, CT, and Omaha, NE. Of the 10 metros with the highest share of price reductions, five are in New England. The rest are in the Midwest (Lake County-Kenosha County, Chicago) or nearby (Omaha, Buffalo, Kansas City). Most of the markets with lots of markdowns at the start of 2013 had even more price reductions at the start of 2012. In fact, among the 100 largest metros, 83 have fewer price reductions now than one year ago.
What explains why some metros-like Oakland, Las Vegas, and Miami-have few markdowns, while others-like Springfield, MA, and Chicago-have many? Two factors stand out among markets with fewer reductions: bigger price gains and a lower vacancy rate. In metros where prices are rising, asking prices are less likely to start out too low: Oakland, Las Vegas, and Miami all had big price gains in 2012, according to the December Trulia Price Monitor. In metros with low vacancy rates, buyers are competing with each other for the few available homes on the market, so sellers don't need to lower prices to attract buyers: Ventura County, CA, for instance, had only a 0.9 percent year-over-year increase in prices in December 2012, but has among the lowest vacancy rates in the country, which means sellers don't need to drop prices to attract interest. Overall, a decline in price reductions is yet another sign that the housing market is tightening.