by Bill McBride on 2/11/2013 09:27:00 AM
Monday, February 11, 2013
Note: 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.
Over the last two years there was a dramatic shift from REO to short sales, and the percentage of distressed sales declined.
Note: The percent of short sales declined in January because some sellers pushed to close in 2012 before the "Mortgage Debt Relief Act of 2007" expired. The Act was extended for one year as part of the fiscal agreement. (Usually cancelled debt is considered income, but some mortgage debt was exlcuded as part of the Act).
This data suggests continued improvement in the Sacramento market.
In January 2013, 44.5% of all resales (single family homes and condos) were distressed sales. This was down from 51.5% last month, and down from 66.6% in January 2012. This is the lowest percentage of distressed sales - and therefore the highest percentage of conventional sales - since the association started tracking the data.
The percentage of REOs stayed increased to 14.2%, and the percentage of short sales decreased to 30.3%.
Here are the statistics.
Click on graph for larger image.
This graph shows the percent of REO sales, short sales and conventional sales.
There has been an increase in conventional sales recently, and there were twice as many short sales as REO sales in January.
Total sales were down from January 2012, but conventional sales were up 51% compared to the same month last year. This is exactly what we expect to see in an improving distressed market - flat or even declining overall sales as distressed sales decline, and conventional sales increase.
Active Listing Inventory for single family homes declined 61.1% from last January.
Cash buyers accounted for 37.4% of all sales (frequently investors), and median prices were up sharply year-over-year (the mix has changed).
This continues to move in the right direction, although the market is still in distress. A "normal" market would be mostly blue on the graph, and this market is a long way from "normal". We are seeing a similar pattern in other distressed areas, with a move to more conventional sales, and a shift from REO to short sales. This is a sign of a recovering market.