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Luxury Homes Get Biggest Price Cuts

Home price reductions may be everywhere in Orange County, but research from real estate search portal Trulia.com shows that they're far more common-and significantly bigger-in the luxury home market.

Luxury homes-officially, those with price tags over $2 million-get the biggest and most frequent price cuts in the market, according to the study. Luxury communities also have the biggest percentage of homes that have slashed prices in recent months.

Corona del Mar, one of the county's most prestigious communities, topped the list with 41% of its active home listings having cut prices. Homes in the area go for around $2.2 million, mostly because of its beachside location and bluff-top views of the coast.

Second on the list is Buena Park, where 40% of active listings have been reduced in the past few months. Buena Park is one only non-coastal location among the top five, the others being in Dana Point, Newport Beach, and Seal Beach.

According to the report, luxury home prices drop by an average of 14% while on the market, surpassing the national average of 10%. Luxury homes are also responsible for 25% of the $28.4 billion total in price reductions on Trulia.com, despite accounting for only 2% of all current listings.

In Orange County, price cuts have occurred in 26.7% of listings in September and October, down from about 29% from July to August. Nationwide, over 25% of Trulia.com listings have reduced their prices over four consecutive months.

Trulia CEO Pete Flint says the dip may be normal for this time of the year, which leaves sellers are stuck between reducing their prices or waiting for interest to rise again at the start of 2010.