1. Headline
  1. Headline
Image: Long Beach
In Long Beach, Calif., the average number of days a home is on the market before a first price reduction is 58. The percentage of for-sale homes where the price has been cut is 33 percent.
updated 5/8/2011 3:08:04 PM ET 2011-05-08T19:08:04

Phoenix is one of the many Sun Belt cities where housing markets have taken a big hit during the recent real estate bust, with residential prices down nearly 45 percent since 2006. That, plus high foreclosure and vacancy rates, make for a dismal market for sellers. For homebuyers, of course, it's a very different story, both in Phoenix and in the many other cities that have followed similar patterns.

We created a list of the 10 U.S. cities with the biggest home price discounts. We compiled this list using the newly launched quarterly Home Offer Report from Trulia.com, a San Francisco-based real estate listing site. Trulia evaluated price cuts in America's 50 largest cities, as defined by the U.S. Office of Management and Budget.

The Trulia folks scoured nonforeclosure residential listing data for all of these cities in the year through March 31, 2011. They tracked prices for single-family homes, townhouses, condos and apartments. The listing information itself came from real estate brokers, agents, third-party aggregators and Multiple Listing Services that participate on the Trulia.com platform.

Forbes.com slideshow: Cities with the biggest home price discounts

The quarterly Home Offer Report, which also provides users with interactive mapping, broke down price cuts on the basis of four metrics: average number of days on the market before first price reductions; average discount during the price-cut period; probability of a second price cut; and the total percentage of for-sale properties of which prices have been reduced at least once.

Forbes took the data, equally weighted it, ranked the 50 cities according to each metric and then combined those rankings to find the 10 cities with the most dramatic overall price reduction activity.

Arizona clearly did not fare well, in part because of the double-whammy of a high likelihood that already struggling housing markets will face a second round of price cuts before properties move. Second behind Phoenix at the top of our list was its neighbor to the south, Mesa, Ariz., which is broken out as a separate geographic area in this report. The Copper State's second largest city, Tucson, placed 10th.

Forbes.com: 25 best cities for an active retirement

Among all homes for sale in Phoenix, 35 percent had their prices cut at least once since going on the sale block, and 56 percent faced the likelihood of further cuts. The average Phoenix home has been sitting at the original sale price prior to that cut a short 48 days. That's a stark contrast to rebounding markets. In relatively robust New York City, for example, property prices had been cut a mere 6 percent after 80 days on the market.

"When you look at Mesa and Phoenix, there are so many foreclosures that sellers have to compete with," explains Daisy Kong, a manager at Trulia.com.

With distressed properties selling for anywhere from a 15 percent to 50 percent discount, sellers of nonforeclosed homes are forced to offer price cuts to compete. Hence Las Vegas, the nation's foreclosure capital, with more than 26,000 foreclosure filings currently on the books, made our list at number seven. Home sellers in Vegas gambled with higher list prices only a short time, slashing values after 54 days on average, with the likelihood of a second chop at 48 percent.

  1. More from TODAY.com
    1. Soldier killed in Canada shootings

      Authorities said security forces shot and killed one gunman after a soldier was killed while guarding the National War Mem...

    2. Take the guilt out of chocolate cake in one easy step
    3. What did the dinosaurs do last night? This family knows all too well
    4. This precious Arctic fox can nibble our toes anytime
    5. Billy Bob Thornton explains blood vials, 'crazy' time with Jolie

Forbes.com: America's 10 most toxic cities

San Francisco, like New York, has avoided an abundance of price cuts. That's not the case for its Bay Area neighbor, Oakland, Calif., which is No. 6 on our list.

"In San Francisco itself you don't see as much movement on price cuts, because those markets tend to be more expensive in general, and sellers are not willing to cut as much," says Kong.

The one Midwestern metropolis that made this list is Minneapolis, Minn., at No. 3. During the year in which Trulia tracked price cuts, the Twin City saw them arrive the fastest — in just 45 days on average. The likelihood of a second round was estimated at 45 percent.

Forbes.com: The best retirement places

Interestingly, though, the ratio of listed homes that had their prices reduced has fallen from 40 percent last year to around 28 percent this April.

"Sellers are actually pricing their homes much lower to start now," explains Kong. "There's not the disconnect (between asking and offering prices) that was there this past year."

© 2012 Forbes.com


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

More on TODAY.com

  1. Chris Wattie / Reuters

    Chaos in Canada’s capital: Soldier killed in shooting

    10/22/2014 9:26:49 PM +00:00 2014-10-22T21:26:49
  1. Courtesy of Linda Dahlstrom Ande

    After 8 years, she took her husband's name: The beautiful reason why

    10/22/2014 3:19:56 PM +00:00 2014-10-22T15:19:56
  1. Getty Images

    It took an ultimatum to get Matthew McConaughey to say 'I do'

    10/22/2014 3:51:19 PM +00:00 2014-10-22T15:51:19
  1. TODAY

    Johnny Weir and Tara Lipinski make big announcement on TODAY

    10/22/2014 2:32:46 PM +00:00 2014-10-22T14:32:46
  1. Mensweardog / Instagram

    How Bodhi, the Menswear Dog, makes $15,000 a month

    10/22/2014 7:07:44 PM +00:00 2014-10-22T19:07:44