VIDEO BLOG
Calm your clients’ nerves with this data on price reductions.
Price reductions, price reductions, price reductions: They seem to be the only thing agents are talking about. If you’re concerned about how you can explain what’s going on to your clients, don’t worry. Today I’ll share what’s happened with price reductions historically and how that relates to our current market.
From a historical perspective, 33% of homes have to reduce their prices before going under contract in a normal market. However, let’s say you work in a market where there is always a shortage of housing, such as Southern California. In those markets, 25% of homes usually have to reduce their prices before going under contract.
In our current market, around 24% of homes have to reduce their prices before going under contract. As you can see, that number is still low from a historical perspective, even for markets with consistently low inventory. However, price reductions are increasing in many markets as more listings have to reduce their prices every day.
The main reason why price reductions are increasing is higher interest rates, inflation, and consumer confidence. The last time interest rates took a big jump in a short amount of time was 2018, when they went from 3.9% to 4.9% quickly. When that happened, 37% of homes had to reduce their prices. By that standard, we’re still in a seller’s market.
Make sure you share this information with your buyers, sellers, and database.
If you have any questions about today’s video or if you’re considering a change in your career to another brokerage or team that specializes in luxury real estate, please call or email me. Don’t forget to jump on our “Luxury Fridays” on YouTube each Friday. Check it out by going to www.LuxuryFridays.com and clicking on the “Luxury Friday’s On YouTube” button.
