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A third of Philly-area sellers in Nov. cut home prices

The Philadelphia region set a record this month, though it's a bit of a dubious distinction: Thirty-one percent of houses sold here involved a cut in price.

The sale of a house on Panama Street in November settled at 9 percent below its asking price. (Michael Bryant / Staff)
The sale of a house on Panama Street in November settled at 9 percent below its asking price. (Michael Bryant / Staff)Read more

The Philadelphia region set a record this month, though it's a bit of a dubious distinction: Thirty-one percent of houses sold here involved a cut in price.

A survey of major metropolitan areas by the real estate search engine Trulia, which has been tracking this information for 10 months, showed price reductions hit historic levels in 15 of the 50 cities studied.

Philadelphia ranked 11th among the 15 record-setting cities, with the average price reduction thus far in November amounting to 9 percent and the total amount of reductions equaling $73.3 million.

The number of reduced-price sales here rose 10 percent in November from October's levels, the survey showed. (No whole numbers were provided. Data on November sales of previously owned homes won't be widely available until December.)

Nationwide, the Trulia survey showed, an average 27 percent of homes sold were listed at reduced prices.

"The market is flooded with distressed homes that are priced to sell, and individual sellers are having a tough time competing," Tara-Nicholle Nelson, consumer educator for Trulia, said in a news release accompanying the survey's results. "These dynamics, along with a shallow pool of active buyers, are leading to increases in price reductions."

The region with the most reduced sales was Minneapolis, with 46 percent. Detroit had the greatest average price reduction, 25 percent.

The Philadelphia region's high percentage - almost one-third of all sales so far this month - hints at a sea change among sellers long unwilling to let go of enough perceived equity to do a deal.

"I have definitely seen a real shift," said Prudential Fox & Roach agent Jeff Block, who sells in Center City. "Many sellers are now 'getting it.'

"I think once more sellers get it - and buyers start to get that it is a good time to buy, when rates are low and prices are down - we may see some things start to turn around," Block said.

Main Line broker John Duffy, of Duffy Real Estate, said quick calculations showed that "the selling price vs. the original list price" for November was down roughly in line with Trulia's findings.

In Haverford, he said, the average price cut was 8.5 percent; in Radnor, 11.47 percent; and in Lower Merion, 10.5 percent. The sizes of the trims were all over the board, Duffy said - even up to a 27 percent discount.

"Sellers are usually the last to get the message about the need for price reductions," said Prudential Fox & Roach's Mark Wade. "Buyers generally exaggerate bad housing news, and sellers tend to ignore bad housing news. It is the classic mental tug-of-war: Each party internalizes to get the best deal."

To lessen uncertainty, Long & Foster regional vice president Art Herling said, he recommends that sellers "get a real prelisting appraisal."

Coldwell Banker Realty's Bruce Lang, who sells in Center City, said his last three sales were at prices reduced 6 percent to 10 percent.

"Some consumers think percent-off is more important than price and value," Lang said. He added that he just sold a property at full price, "but it was priced well."

Center City Realtor Allan Domb, who focuses on the high-rise condo market, said his statistics showed discounts of 10 percent to 15 percent in the under-$500,000 market, 15 percent to 20 percent in the $500,000-to-$1-million price bracket, and 20 percent to 40 percent in the $1-million-plus market.

At the high end, he said, the big discounts are the result of "baby boomers' seeing their suburban-home prices drop and not being able to sell them for the prices of 2005."

Prudential Fox & Roach agent Bari Shor offered an example of "price reduction, market acceptance, and sale" - sellers who bought a home at the height of the market for $850,000 and made many expensive, quality upgrades.

"When pricing slightly above what they paid - $865,000 - did not work, they reduced the price to $835,000 and received two offers," Shor said, "with a sale price of $830,000."

October data compiled by Prudential Fox & Roach's HomExpert Market Report show 2,888 houses sold in the eight-county Philadelphia region, nearly 40 percent below October 2009's levels.

In October 2008, just a few weeks after the U.S. economy melted down, there were 3,676 sales.

Even worse this October was that the number of properties in the region going under contract, known as pending sales, fell 37.5 percent from October 2009 levels. There were fewer pending sales than in October 2008 - 2,903 compared with 2,911.

At the current pace, it would take 13.9 months to sell the 48,000 existing homes on the market, 2,000 more than were for sale a year ago.

The standoff between buyers and sellers appears to be lessening as sellers accept reality and buyers see the market stabilizing, Shor said.

"Gradually, sellers are accepting the facts," she said, "and buyers are starting to respond."