Housing/financial haircut

[Ann Burlingham]

While searching for information about cutting hair, I came across a
usage today I hadn't seen before: "haircut" to refer to cutting the
asking price of real estate. I'm not yet clear on the definition - a
little off the top? a lot off the top? The first article I came across
is a Seattle real estate column discussing "worst haircuts" - the
biggest price-drops in housing prices:
http://seattlebubble.com/blog/2010/10/04/whats-the-worst-home-price-haircut-youve-found/

this one http://housingdoom.com/2008/02/17/a-33-haircut/ is headlined
"A 33% haircut– and we're just getting started"
and includes
"Home is currently listed for sale at $190,890.  That would be a 33%
haircut- if it sold at list, which isn’t going to happen."
It concludes:
"Look for the haircuts to get shorter and shorter this year- and more
properties will be wearing them. "

which I find confusing - is a "shorter haircut" a smaller drop, as I
first thought, or, my second guess, the resulting price is lower,
therefor  "shorter"?

I find it defined in a couple online glossaries, for instance here
http://www.investopedia.com/terms/h/haircut.asp#axzz1UpJGq4pU

What Does Haircut Mean?
1. The difference between prices at which a market maker can buy and
sell a security.

2. The percentage by which an asset's market value is reduced for the
purpose of calculating capital requirement, margin and collateral
levels.

Investopedia explains Haircut
1. The term haircut comes from the fact that market makers can trade
at such a thin spread.

2. When they are used as collateral, securities will generally be
devalued since a cushion is required by the lending parties in case
the market value falls.


So, a new one to me, clearly in use by insiders but opaque at my first
glance. It sounds like it's been around in financial circles longest.
(I apologise if this is woefully off-topic; I guess it's more jargon
than dialect.)

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