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 Orange 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 months in Orange County 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:

Good news if you’re in the market for some expensive oceanfront property, as the top three zip codes are all in Newport Beach. For those buyers that aren’t quite shopping in the million-dollar-plus range, there’s also some good deals to be had inland a little bit in Laguna Woods (92637), where the average sale price came in just south of $300k, and sellers accepted an average of just under 8% below asking price.

26 of the 80 zip codes we ranked came in with discounts under 2%, 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.

Several neighborhoods in OC actually had an average sale price that was higher than the final list price, with the largest difference coming in SW Santa Ana (92704). None of the top 10 zip codes that are selling for low discounts or over asking had an average list price above $400k.

In fact, looking at the overall data, there is a clear trend of homes in neighborhoods with lower average prices selling closer to asking price. Keep that in mind if you’re thinking of making a below-list offer.

Of the 5,775 sales we tracked in the 3-month period, just 83 homes (1.4%) sold for 20% or more off the asking price, and 475 homes (8.2%) sold for 10% or more off the asking price. 1,618 homes (28.0%) 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 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 (usually the higher-priced neighborhoods), 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.

Both Woodbury and Old Town Huntington Beach made this month’s top ten neighborhoods with the most price-reduced listings and the fastest price reductions.

On average, OC neighborhoods where price reductions happened the fastest were those with slightly higher 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 $318, while the ten neighborhoods with the slowest price reductions had an average median sold price of $298 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 42 cities/towns we ranked in Orange County, only Las Flores had a price-reduced ratio of over sixty percent, while 15 came in with fifty percent or more. Three cities neighboring the military facilities—Rossmoor, Los Alamitos, and Seal Beach—made the top ten.

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

No city in Orange County has had fewer than 40% of homes with price reductions in the last 90 days. Compare this to neighboring Los Angeles County, where 30 cities had fewer than 40% of homees with price reductions.

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

19 of the 53 neighborhoods we ranked in Orange County had a price-reduced ratio of fifty percent or more. Sellers in Huntington Beach (which as a whole had 53% of homes that were price-reduced—#10 on the Most Reduced list above) are apprently quite motivated, as it is home to five of the top ten neighborhoods for price reductions (Huntington Harbour, Holly-Seacliff, Beach Boulevard, Old Town Huntington Beach, and Downtown Huntington Beach).

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

The hilly Irvine neighborhood of Turtle Ridge takes the top spot, but even right next door to UC Irvine a quarter of sellers are reducing their prices to move their homes.