High End Taking the Brunt of Price Cuts

We know the luxury real estate market in Pleasanton, Ruby Hill, Danville, Alamo, and Blackhawk have had their struggles this year. A new report shows that Luxury homes, defined as those listed for $2,000,000 or more, have had more price reductions than lower priced homes in the Bay Area, according to online real estate company Trulia.

More than a quarter of homes for sale in San Francisco (28%) have had price reductions and the average chop is running at 9%. The picture in San Francisco mirrors the national one: 25.6% of homes currently on the market in the United States as of November 1 have experienced at least one price cut during the past 12-months.

Interestingly, the survey, which looked at the top 50 metropolitan areas, showed that in two Bay Area cities - Oakland and San Jose — the number of price reductions has actually declined between June 2009 and November 2009. Oakland saw a 16% decline while San Jose saw a 25% drop. This is probably a reflection of the number of foreclosed properties in these markets which impacts on the overall trends in price cuts

Across the board it continues to be luxury homes — defined as those listed at $2 million or more — which are bearing the brunt of discounting with an average of 14% being slashed from original asking prices, compared to the national average of 10%. A prime example? A 5,899 sq ft five-bedroom Tudor home on Muir Ave in Piedmont which listed in March for $3,500,000 and, after two chops, is now 20% down at $2,788,000.

In the Tri-Valley luxury markets including Pleasanton, Ruby Hill, Danville, Alamo, and Blackhawk, the high end is seeing continued weakness, with anywhere from 1 to 2 years worth of inventory on the market at any given time. Right now there are 93 homes on the market in the Tri-Valley over $2 million. 41% of these homes have had price reductions. The average days on market for these homes is 206.

Among these homes, there has been some huge price reductions. Here are the 6 largest price cuts, all over $1 million:

The price reductions on these homes range from $1 million to $3.5 million, or 17% to 41%. Obviously, the lower the price, the lower the price reductions, even in percentage terms. But the top end of the luxury market continues to see some strong downward pressure and sluggish market conditions.

Source: and the MLS