Thursday, December 10, 2015

Sacramento Housing in November: Sales up 11.5%, Inventory down 28% YoY

by Bill McBride on 12/10/2015 07:05:00 PM

Thursday:
• At 8:30 AM ET, the Producer Price Index for November from the BLS. The consensus is for no changed in prices, and a 0.1% increase in core PPI.

• Also at 8:30 AM, Retail sales for November will be released. The consensus is for retail sales to increase 0.3% in November, and to increase 0.3% ex-autos.

• At 10:00 AM, Manufacturing and Trade: Inventories and Sales (business inventories) report for October. The consensus is for a 0.1% increase in inventories.

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (preliminary for December). The consensus is for a reading of 92.0, up from 91.3 in November.

Sacramento: During the recession, I started following the Sacramento market to look for changes in the mix of houses sold (equity, REOs, and short sales). For a few years, not much changed. But in 2012 and 2013, we saw some significant changes with a dramatic shift from distressed sales to more normal equity sales.

This data suggests healing in the Sacramento market and other distressed markets are showing similar improvement.  Note: The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

In November, total sales were up  11.5% from November 2014, and conventional equity sales were up 13.9% compared to the same month last year.

In November, 8.3% of all resales were distressed sales. This was up from 7.0% last month, and down from 11.5% in November 2014.  Distressed sales happen all year, but equity sales have a seasonal pattern - so this pushed up the percent of distressed sales in the Winter.

The percentage of REOs was at 3.7% in October, and the percentage of short sales was 4.6%.

Here are the statistics.

Sacramento Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales. Distressed sales are so small, the font doesn't fit.

There has been a sharp increase in conventional (equity) sales that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Active Listing Inventory for single family homes decreased 28.4% year-over-year (YoY) in October.  This was the seventh consecutive monthly YoY decrease in inventory in Sacramento (a big recent change).

Cash buyers accounted for 20.2% of all sales (frequently investors).

Summary: This data suggests a more normal market with fewer distressed sales, more equity sales, and less investor buying.