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Tuesday, March 16, 2010

Distressed Sales: Sacramento as an Example, February Update

by Calculated Risk on 3/16/2010 06:49:00 PM

The Sacramento Association of REALTORS® is breaking out monthly resales by equity sales (conventional resales), and distressed sales (Short sales and REO sales), and I'm following this series as an example to see mix changes in a distressed area. It will be especially interesting to track this after the Home Affordable Foreclosure Alternatives (HAFA) starts on April 5th.

Distressed Sales Click on graph for larger image in new window.

Here is the February data.

The Sacramento Association started breaking out REO sales in 2008, but they have only broken out short sales since June 2009. Almost 68% of all resales (single family homes and condos) were distressed sales in February.

Note: This data is not seasonally adjusted, and the decline in sales from the end of last year is about normal.

Distressed Sales The second graph shows the percent of REO, short sales and conventional sales. The percent of REOs has been increasing again, and the percent of short sales has declined slightly over the last couple of months. The percent of conventional sales peaked last November, and has declined to 32% in February.

Now that many HAMP trial modifications have been cancelled, I expect REO sales to increase. Also, I expect the percentage of short sales to be higher in 2010 than in 2009 - but probably not as high as foreclosures (it will be interesting to watch).

Also total sales in February were off 24.3% compared to February 2009; the ninth month in a row with declining YoY sales.

On financing, over 60 percent were either all cash (30.7%) or FHA loans (30.2%), suggesting most of the activity in distressed former bubble areas like Sacramento is first time home buyers using government-insured FHA loans, and investors paying cash.