Home Sellers Slash Real Estate Listing Prices in May

According to data recently released by online real estate brokerage ZipRealty, more than 43 percent of people trying to sell their homes lowered their asking prices in May.

This is likely an after-effect of the expiration of the first-time home buyer tax credit, as sellers realize they are now working with a much smaller pool of prospective home buyers. The tax credit expired back on April 30, and a flurry of buyers rushed to beat the deadline in order cash in on rebates of up to $8,000.

Since then, mortgage applications have fallen off considerably.

“Home sellers may be lowering their list price to help stimulate interest from home shoppers now that the first-time and repeat-home-buyer credits have expired,” said Leslie Tyler, vice president of marketing for ZipRealty, in a news release.

The median asking prices of houses up for sale in May was $264,936, down almost $2,500 from the previous month. Since then, the vast majority of mortgage activity has revolved around current homeowners refinancing their existing mortgages with the near-historic low mortgage rates currently available.

ZipRealty also reported last week that online searches for home are down considerably, with web traffic on real estate websites down almost 20 percent from this time in 2009.

According to Ziprealty CEO Pat Lashinsky, the housing market does not appear to have bottomed out yet either with respect to falling list prices. In an interview last week with the PBS Nightly Business Report, Lashinsky suggested, “I don’t think that we can say that housing has hit its bottom right now. I think that we’re going to see that the data right now that we’re seeing coming out of May and into June shows that I think that we’re going to see a softening of volumes as a result of the tax credit going away. We’re also seeing prices not holding up as well as we expected given how low the mortgages are.”

Lashinsky also stated in the interview that sellers who failed to get a deal prior to the tax credit expirations are not sitting in the most enviable of positions at this point in time.

“The sellers who missed out on the tax credit in getting their home price range sold are a little more worried now. They’re not seeing as much activity and they’re not seeing as many multiple offers. And so sellers are feeling more pressure than they did even just 30 days ago.”

Where do you think home prices are headed in the foreseeable future? When do you expect the real estate to bottom out? Let us know in the comments section below.