Thursday, August 11, 2011

Distressed House Sales using Sacramento data

by Bill McBride on 8/11/2011 06:51:00 PM

I've been following the Sacramento market to see the change in mix over time (conventional, REOs, and short sales) in a distressed area. The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

I'm not exactly sure what I'm looking for, but hopefully I'll know it when I see it! As some point, the number (and percent) of distressed sales will start to decline without foreclosure moratoria, homebuyer tax credits or other distortions.

The percent of distressed sales in Sacramento declined in July compared to June. Some of this decline could be seasonal, and some could be due to further foreclosure delays. In July 2011, 61.3% of all resales (single family homes and condos) were distressed sales. This is down from 65.2% in June, and down from 63.0% in July 2010.

Here are the statistics.

Distressed Sales Click on graph for larger image in graph gallery.

This graph shows the percent of REO, short sales and conventional sales. There is a seasonal pattern for conventional sales (strong in the spring and summer), and distressed sales happen all year - so the percentage of distressed sales decreases every summer.

Note: Prior to June 2009, it is unclear if short sales were included as REO or as "conventional" - or some of both. The tax credits might have also boosted conventional sales in 2009 and early 2010.

Total sales were up 15.1% over July 2010 (sales fell last July after the tax credit expired, so a year-over-year increase was expected). Sales are down 13% compared to July 2009 and 19% compared to July 2008 - mostly due to fewer distressed sales.

Active Listing Inventory is down 21.1% from last July - we are seeing a decline in inventory in most areas. Once the foreclosure delays end, this data might be helpful in determining when the market is improving.