Home sellers in Minneapolis are more likely than anywhere else in the nation to offer a price reduction on their house, but not necessarily because this is the worst market in the nation.

In fact, in Minneapolis 44 percent of all homes listed as of Oct. 11 have had at least one price reduction with an average price reduction of 11 percent, according to data released today by trulia.com, which conducts a monthly survey of house listings of nationwide. The October survey showed that nationwide the average price reduction was 27 percent — a slight increase over the past couple months.

Given the relative stability of the market in the Twin Cities metro areas, surprisingly it was the sixth straight month that Minneapolis topped the list. Minneapolis was also the first city to break the 40 percent mark (it happened in May); the only other city in the nation to exceed the 40 percent threshold was Cleveland.

Be careful, though, about drawing too many conclusions from the distinction.

Tara-Nicholle Nelson, a real estate broker, lawyer and Trulia's manager of consumer public relations, confirmed my suspicions about what might be behind the ranking: home sellers in the Twin Cities metro area tend to price high and quickly drop their price. Nelson agrees, saying that a high price reduction rate doesn't go hand-in-hand with distress in the market. In fact, she said that compared with other cities that made the list Minneapolis is relatively stable. For example, there's an 8.6-month supply of houses on the market in the Twin Cities metro area compared with 11.6 months nationally.

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"Price reductions might be attributable to differences in pricing and bargaining strategies in the Midwest when compared with the coast markets," Nelson said, adding that on the coasts sellers are pressured to list their homes low in hopes the low price will attract multiple offers, overbidding and a high asking price. She said that in the Midwest, and Minneapolis in particular, sellers list high with the expectation that a traditional bargaining negotiation will occur, ending up in a lower-than-asking sale price.
The trend was similar throughout the 13-county metro area, where the highest percentage of mark downs occurred in the most central counties while the biggest reductions tended to happen in outlying counties.