Monday, June 07, 2010

Distressed Sales: Sacramento as an Example, May 2010

by Bill McBride on 6/07/2010 06:42:00 PM

The Sacramento Association of REALTORS® is breaking out monthly resales by equity sales (conventional resales), and distressed sales (Short sales and REO sales), and I'm following this series as an example to see mix changes in a distressed area.

Distressed Sales Click on graph for larger image in new window.

Here is the May data.

The Sacramento Association started breaking out REO sales in 2008, but they have only broken out short sales since June 2009 - so we now have one year of data.

In May, 60.1% of all resales (single family homes and condos) were distressed sales. This is the lowest level over the last year.

Note: This data is not seasonally adjusted.

Distressed Sales The second graph shows the percent of REO, short sales and conventional sales. The percent of short sales is near the high set in December and will probably continue to increase later this year (2010 is the year of the short sale!).

The percent of REOs has been generally declining (seasonally there are a larger percentage of REOs in the winter). Also there appears to be a higher percentage of conventional sales associated with the tax credit.

Also total sales in May were off 1.8% compared to May 2009; the 12th month in a row with declining YoY sales - even with the tax credit buying this year!

On financing, 57 percent were either all cash (23.3%) or FHA loans (33.6%), suggesting most of the activity in distressed former bubble areas like Sacramento is first time home buyers using government-insured FHA loans, and investors paying cash.

Starting in June we can do some year-over-year comparisons. It appears short sales will be up substantially YoY and REOs down, and it will be interesting to see the level of total distressed sales once the tax credit buying is behind us (July).