Thursday, May 10, 2012

Sacramento: Percentage of Distressed House Sales increases slightly in April

by Bill McBride on 5/10/2012 02:30:00 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.

So far there has been a shift from REO to short sales, and the percentage of distressed sales has been declining year-over-year. This data would suggest improvement, however we do not know the impact of the mortgage settlement yet (the court signed off on the agreement last week).

In April 2012, 60.7% of all resales (single family homes and condos) were distressed sales. This was up from 59.6% last month, and down from 66.8% in April 2011. This is lower than the last few years, but 60% distressed is still extremely high!

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.

There will be probably be more foreclosures following the mortgage servicer settlement, but this is still a sharp increase in conventional sales. In another change, there were more short sales than REO sales in April.

Total sales were up 7.2% compared to April 2011, and conventional sales were up 27% year-over-year. Active Listing Inventory declined 65.7% from last April, and total inventory, including "short sale contingent", was off 38% year-over-year.

Cash buyers accounted for 32.0% of all sales (frequently investors), and median prices were down 6.5% from last April.

I've been hoping this data would help determine when the market is improving. Unfortunately the mortgage settlement is a big unknown. Otherwise this would be considered progress, although the market is still in distress.

We are seeing similar patterns in other distressed areas. This will be interesting to watch over the next few months to see the impact of the mortgage settlement.

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