Not in New York City.
According to StreetEasy, few sellers are lowering their prices enough to get even a nod from prospective buyers in NYC’s current weak market and flush inventory.
The share of listings with price cuts through mid-June 2019 currently sits at 33%, similar to 2018 with 32% and dramatically up from 20% in 2014. The bottom line for listings with price cuts is that the cuts are too small and too late to generate an actual sale.
StreetEasy reported that its website users were slightly more likely to “save” a listed unit the week following a price cut than the week preceding the cut. Saves were up +54% BUT of those “extra” saves, those listings only generated one or two more saves. Those one or two extra saves stand in stark contrast to the reality that it takes a median number of 49 saves during the first one or two on-market weeks to actually sell a house.
Even price cuts made after holiday weekends, the most popular time for sellers to make cuts, do not appear to impact buyer interest. According to StreetEasy, just 22% of homes with price cuts made after this latest Memorial holiday weekend generated more than 5 additional saves on its website.
The real message that price cuts deliver to potential buyers is the seller’s willingness to negotiate on top of the latest price reduction. Of all the homes listed with price cuts on StreetEasy between 2014-2018, 80% of those homes were sold below the final asking price. This trend of accepting offers for less than the final asking price, the final cut price, is extending into 2019.
The median total discount from the first listing price to the closing price comes in at 10.5%…approximately 6% of this 10% comes off the public listing and 4% comes off in the final negotiation.
StreetEasy’s advice to buyers? View price cuts as an opportunity to make a deal. “Lingering listings with price cuts are prey for hard-driving buyers and lowball deals>”
StreetEasy’s advice to sellers AND agents? Buyers now hold the power at the bargaining table (at least in NYC.) With prices of 2019 sold units down -5% from 2018, the largest price drop since the recession, the market is “unlikely to be able to absorb the record levels of inventory without deeper cuts to listings.”
Sellers and agents need to do “…all the research they can to price strategically from the start.” Sellers and agents will know after a few weeks whether or not their price is strategic enough. If not, the longer the unit sits on the market, the more likely it is that the unit will sell below the asking price and/or the harder it may become to find a buyer for the unit at all.
Do price cuts work in your market? Let us know.
