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 in Cook County? 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 and a half months from all of Cook County and sorted it by city. 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 cities 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 cities with the largest overall discount:

The largest discounts were in the south county towns of Harvey and neighboring Markham, where sellers are accepting discounted offers on homes that are already cheap to begin with. Cities with large discounts ranged all across the board of affordability, with Harvey at the low-price end at an average sold price of just $33,193, and lakeside Glencoe at the high end with an average sold price of $1,075,225.

33 of the 94 cities we ranked came in with discounts under 5%, indicating that either buyers are more willing to pay asking price or sellers in those regions are better at pricing their homes appropriately to the market in the first place.

Of the 8,111 sales we tracked in the 3.5-month period, 355 homes (4.3%) sold for 20% or more off the asking price, and 1,323 homes (16.3%) sold for 10% or more off the asking price. 994 homes (12.3%) sold for more than asking price.

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 cities 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 cities 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 full price or even more.

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.

None of the neighborhoods with the fastest price reductions made this month’s top ten neighborhoods with the most price-reduced listings. On average, 37% of listings taken off the market in the Chicago neighborhoods with the fastest price reductions had experienced price reductions.

On average, neighborhoods where price reductions happen the fastest in the Chicago area had slighly lower prices both in terms of median price and price per square foot. The average median sold price per square foot of the top ten neighborhoods with the fastest price reductions was $163, while the ten neighborhoods with the slowest price reductions had an average median sold price of $215 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 247 cities/towns we ranked in the Chicago area, only these top ten had a price-reduced ratio of fifty percent or more. Straddling I-90 an hour west of Chicago, the small village of Gilberts was the sole town with over sixty percent price-reduced listings.

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

While no cities in Cook County appeared on the most price-reduced list, Cook makes a strong showing on the least price-reduced list, taking five spots. Interestingly, Poplar Grove, the city with the least amount of price-reduced listings, is even further east of Chicago off I-90 than Gilberts.

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

Only 3 of the 104 neighborhoods we ranked in Redfin’s Chicago service area had a price-reduced ratio of fifty percent or more. In neighborhoods where homes are coming off the market, the majority of sellers are not reducing their price.

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

Even further east than the city with least price-reduced listings are the neighborhoods of West Rockford and North Rockford, which bookend the top ten least price-reduced neighborhoods list. With their respective median sold home prices of $32,000 and $82,000, perhaps sellers in West and North Rockford simply don’t have room to drop the price.

In general, the neighborhoods where more sellers are reducing their price tend to be lower-priced (many with median home prices under $250k) than those that are seeing fewer price reductions (which tend to have median prices over $250k).