Monday, January 09, 2012

Distressed House Sales using Sacramento Data for December

by Bill McBride on 1/09/2012 04:20:00 PM

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

This will be interesting once something changes. So far the changes have been minor - mostly a shift from REO to short sales - but the percentage of distressed sales has declined a little year-over-year. At some point, the number and percent of distressed sales should start to decline significantly (excluding seasonal factors and market distortions like the home buyer tax credit).

The percent of distressed sales in Sacramento was unchanged in December compared to November. In December 2011, 64.1% of all resales (single family homes and condos) were distressed sales. This was down from 67.1% in December 2010 - and the lowest percentage of December distressed sales since Sacramento started breaking out the data.

Here are the statistics.

Distressed Sales Click on graph for larger image.

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

Total sales were up 10.1% compared to December 2010. Active Listing Inventory declined 42.5% from last December, although "short sale contingent" has increased. Cash buyers accounted for 30.8% of all sales (frequently investors), and median prices are off about 10% from last December.

This data might be helpful in determining when the market is improving. So far it looks like REO sales have declined (this is the lowest percentage of REO sales since Sacramento started breaking out REOs), mostly offset by an increase in short sales, and just a slight decline in the total percent of distressed sales. Also inventory has plummeted.