Where are buyers getting the biggest discounts?

While the number and speed of price reductions is certainly interesting information (to some), what really matters to folks out there in the market right now is the size of price reductions. Better yet, how receptive are sellers to accepting an offer below their asking price?

Let’s get down to the nitty gritty. Where are buyers currently getting the biggest discount off the asking price around Boston? Knowing which neighborhoods are softer in terms of sale price discounts off list price will better equip you when making an offer.

In the charts below, we have taken all sales data from the last three months and sorted it by zip code. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any zips with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel 2007 format.

Here are the top ten zip codes with the largest overall discount:

The largest discounts were found just outside of downtown Boston to the north in Revere (02151) and to the south in Roxbury (02119), where buyers were able to get over 6% off the final asking price, on average.

The smallest discounts by far were in Mattapan (02126), where the 19 homes sold in the past three months sold for an average of just 1.5% less than asking.

Of the 803 sales we tracked in the 3-month period, 25 homes sold for more than 20% off the asking price, while 65 homes sold for more than asking.

It will be interesting to keep an eye on this data once we have been able to run it for a number of months, to see which neighborhoods are trending toward larger discounts and which are trending toward selling at full price.

I think the takeaway from this data is that when crafting an offer, buyers should be aware that not all neighborhoods are created equal. While an offer 10% below list price may be accepted in a neighborhood where buyers are few and far between, some areas are still seeing enough interest to command nearly full price.

Come to Our Home Buying Class

Just a quick reminder that we’ll be hosting a free home buying class tomorrow night at our offices at:
35 Medford St Suite 305
Somerville, MA 02143

Topics we’ll cover include:

• The Home Buying Process
• Mortgages
• State of the Market
• Working with Redfin

Our agents will also be on hand for one on one meetings or to answer any of your questions. Come meet us and bring your questions, comments or concerns.

Sign up to find out more.

Please contact me directly with any subject requests or questions.

Hope to see you there!

Thanks,
Alex Coon
Boston Market Manager

Which Neighborhoods Have the Fastest Price Reductions?

Here’s a fun set of data. Redfin data engineers have dug deep into our market databases to find out which neighborhoods have the fastest price reductions.

For listings with more than one price drop, we calculated the time between each price drop. Then, for each neighborhood, we calculated the median average number of days between successive price drops for listings. Neighborhoods with fewer than 20 reduced-price listings were excluded from the calculation.

Here’s a chart of the top ten neighborhoods with the fastest price reductions:

For those readers that are interested to know which neighborhoods had the slowest price drops, feel free to download the full data set in Excel 2007 format.

Both Indian Lake East and Upper Washington made this month’s top ten neighborhoods with the most price-reduced listings and the fastest price reductions.

On average, neighborhoods where price reductions happen the fastest seem to be those with lower prices, both in terms of overall median and per square foot. The average median sold price per square foot of the top ten neighborhoods with the fastest price reductions was $243, while the ten neighborhoods with the slowest price reductions had an average median sold price of nearly $400 per square foot.

Which Cities, Towns, and Neighborhoods have the most price reductions?

Today Redfin is launching the new Sweet Digs, Analytical Edition. We’re proud to introduce Tim Ellis as the curator of this new effort. Tim will bring the same independent, data-driven perspective to Sweet Digs that first established him as a pre-eminent real estate blogger, but with pricing data that only a broker—and sometimes only Redfin—can access. He will be joined by other bloggers providing real-time insights on how contracts are being negotiated in neighborhoods around the area.

Sweet Digs is still a work in progress so if you have ideas about the types of posts you’d like to see — or if you’d like to contribute an analytical post of your own — just drop me (glenn at redfin dot com) or Tim (the_tim at thatchmound dot com) a line or leave a comment below. Thanks for all your support, and we look forward to hearing from you!

Regards, Glenn Kelman, CEO Redfin

I’d like to thank Glenn and the good people at Redfin for giving me the opportunity to delve into real estate data and share insights with readers from around the country. To kick things off, let’s take a look at which cities and towns have the most price reductions.

The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.

First up are the top ten cities with the most price-reduced listings:

Of the 204 cities/towns we ranked in the Boston area, 13 had a price-reduced ratio of over sixty percent, while 79 had fifty percent or more. Outlying Merrimac had the largest percent of homes taken off the market that experienced price reductions. Interestingly, two of the cities on the top ten list—Lincoln and Wayland—are actually fairly close to the city center. For comparison, 43% of homes taken off the market in Boston proper had price reductions.

Here are the top ten cities with the least price-reduced listings:

On average, the cities with the least price-reduced listings are actually further away from Boston than those with the most price-reduced listings.

Getting a little more granular, let’s look at the top ten Boston-area neighborhoods for price reductions:

Only one of the top ten neighborhoods for price-reductions is outside Suffolk County—Indian Lake East Not too surprisingly, homes near the airport are the most likely to have had a price drop. Of the 65 neighborhoods we ranked in Redfin’s Boston service area, 16 had a price-reduced ratio of over fifty percent.

Lastly, let’s take a look at which neighborhoods had the least price-reduced listings taken off the market:

Half of the top ten neighborhoods with the least price-reduced listings were outside of Suffolk County.

On average, it seems that sellers in closer-in cities, towns, and neighborhoods in the Boston area are much more likely to reduce their price than sellers in outlying areas. If the present economic downturn continues to deepen, it will be interesting to see if this trend continues.