Source: inman.com Dyan Hymer, author
Why multiple, smaller reductions can backfire.
During the bubble housing market, a price reduction was considered a stigma. This was a time when most listings sold reasonably quickly. A price reduction meant there was probably something wrong with the property. That’s not the case today. Price reductions are common. Often a search of the multiple listing service (MLS) will reveal more price reductions in a day than pending sales or sold listings. Now, a price reduction may simply mean that the listing is priced too high for the market. To be priced right for today’s market, your home needs to appeal to buyers who are looking for a good deal. They are buying into an uncertain future. They are nervous about the direction of home prices. Have they bottomed out? Will they drop considerably from the current level? Will they remain flat for awhile? Or will they steadily improve from here? Most economists agree that if home prices continue to decline, and many believe they will, the declines will be less precipitous than they were in 2008 and 2009. Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, thinks that we have hit bottom price-wise and are now bouncing along the bottom. This means that there will be periods where the home-sale market will strengthen — usually following good economic news — followed by periods of stagnation. Home prices could bounce up and down until a sustainable housing recovery is reached.