by Bill McBride on 11/18/2012 05:26:00 PM
Sunday, November 18, 2012
Economist Tom Lawler sent me the table below of short sales and foreclosures for a few selected cities in October. Keep this table in mind when the NAR releases existing home sales tomorrow.
The NAR headline number will probably be close to the 4.75 million SAAR in September, but there are other signs of significant change in the housing market. First, inventory has declined sharply, and there is very little inventory in many areas. Second, it appears that the share of conventional sales in certain markets has increased significantly (these are normal sales - not foreclosures or short sales). Both the decline in inventory, and the increase in conventional sales, are signs of moving towards a more normal housing market.
Look at the right two columns in the table below (Total "Distressed" Share for Oct 2012 compared to Oct 2011). In every area that reports distressed sales, the share of distressed sales is down year-over-year - and down significantly in most areas. The NAR will release some distressed sales measurements tomorrow from an unscientific survey of Realtors - and I have little confidence in the survey results - but these local reports suggest distressed sales have fallen sharply in many areas.
Also there has been a decline in foreclosure sales just about everywhere. Look at the middle two columns comparing foreclosure sales for Oct 2012 to Oct 2011. Foreclosure sales have declined in all these areas, and some of the declines have been stunning (the Nevada sales were impacted by a new foreclosure law).
Also there has been a shift from foreclosures to short sales. In most areas, short sales now far out number foreclosures, although Minneapolis is an exception with more foreclosures than short sales.
Imagine that the number of total sales doesn't change over the next year - some people would argue that is "bad" news and the housing market isn't recovering. But also imagine that the share of distressed sales declines 25%, and conventional sales increase to make up the difference. That would be a positive sign! As I noted a week ago, conventional sales in Sacramento were up 55% year-over-year in October (there were 2 more selling days in Oct 2012, but that is still a stunning increase). Too bad we don't have better national numbers on the share of distressed / conventional sales, but this table suggests some improvement.
Table from Tom Lawler:
|Short Sales Share||Foreclosure Sales Share||Total "Distressed" Share|
|Lee County, FL***||20.4%||19.8%||16.4%||33.7%||36.8%||53.5%|
|Hampton Roads VA||28.3%||33.2%|
|*share of existing home sales, based on property records|
|*** SF only|