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 DC? 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 from our entire DC coverage area 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 by far were in the Great Falls area (22066), where some very expensive homes are selling at relatively steep discounts. The average list price of sold homes in 22066 was $1,422,654, while the average sale price was $1,254,527. Homes in the north corner of DC (20012) are also selling at a large discount of nearly 10% off list, and with an average closing price of $492,306, might be a bit more in most home shoppers’ range.

17 of the 92 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.

Interestingly, the #1 zip code for smallest discounts was in Herndon (20170), right next door to the #1 zip code for largest discounts in the Great Falls area (22066). Of course, with an average list price of just $256,738, prices in Herndon don’t have much room to go down, compared to many other regions around DC.

Of the 4,738 sales we tracked in the 3-month period, just 32 homes (0.7%) sold for more than 20% off the asking price, and 309 homes (6.5%) sold for 10% or more off the asking price. 918 homes (19.4%) 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, 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.

Only Trinidad made this month’s top ten neighborhoods with the most price-reduced listings and the top ten fastest price reductions.

On average, neighborhoods where price reductions happen the fastest in the DC area seem to be those with higher prices in terms of price per square foot. The average median sold price per square foot of the top ten neighborhoods with the fastest price reductions was $387, while the ten neighborhoods with the slowest price reductions had an average median sold price of just $117 per square foot. So don’t assume that just because sellers in a particular neighborhood are reducing their prices quickly, you can find great deals there.

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 241 cities/towns we ranked in the DC area, 51 had a price-reduced ratio of over sixty percent, while 146 had fifty percent or more. Coming in at a surprisingly high 78%, Forest Glen had the largest percent of homes taken off the market that experienced price reductions. For comparison, just 44% of homes taken off the market in the District of Columbia had price reductions. Most of the cities/towns in the top ten are north and east of DC in Maryland, with Aquia Harbour being the only place in Virginia to make the cut.

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

West Virginia makes an appearance on the least price-reduced list, as neighboring Charles Town and the Corporation of Ranson come in at #2 and #6, respectively. Over in the center of the Delmarva Peninsula, home sellers in Salisbury were by far the least willing to drop their prices.

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

Six of the top ten neighborhoods for price-reductions were in Baltimore. Of the 154 neighborhoods we ranked in Redfin’s DC service area, 44 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:

The District of Columbia dominated the least price-reduced list, taking five of the top ten spots.

Interestingly, while none of the top ten neighborhoods with the most price-reductions had a median closed house price greater than $300,000, six out of the top ten least price-reduced neighborhoods had median house prices in excess of $500,000. It would seem that the more ritzy the neighborhood, the less likely it is that sellers will reduce their asking prices.