SUMMARY
Using data on 150,000 home sales occurring over 12 to 24 month periods, we performed analyses such as this one on 5 Bay Area regions comprising 10 counties. The specific results varied by market region, but large differences in sales-price-to-original-list-price percentages and average days-on-market between homes that sold without price reduction and those selling after price reduction were universal, which is to be expected. The calculations regarding the value differentials between these sales must be considered approximate : The same home can’t be sold at the same point in time at different list prices, with and without price reductions to compare the results. But in all the regional analyses we performed comparing the 2 types of sale, the change in value – i.e. the average loss in value seen in price reduced homes – ranged from 6% to 8%. Certainly, this differential varies widely amid tens of thousands of individual homes in varying circumstances of sale, but it seems clear that the decline in value is significant . Considering home prices in the Bay Area, even a 3% to 4% decline adds up to a loss of tens of thousands of dollars in seller proceeds, besides the much longer period necessary to realize the sale.
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