In Depth Analysis: CalculatedRisk Newsletter on Real Estate (Ad Free) Read it here.

Monday, July 12, 2010

Distressed Sales: Sacramento as an Example, June 2010

by Calculated Risk on 7/12/2010 04:08:00 PM

The Sacramento Association of REALTORS® has been breaking out short sales for over a year now. They report 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.

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

Here is the June data.

Total June sales were up from May, and up from June 2009. Of course June was the scheduled closing deadline to qualify for the Federal homebuyer tax credit (closing date since extended), and also the California tax credit played a role. Sales should collapse in July.

The year-over-year (YoY) increase in June sales break a 12 month streak of declining YoY sales. But that was because of the tax credit, and sales will be off YoY in July.

Short sales were up 66% YoY (Year of the Short Sale!), and REO sales were down by 30%.

Note: This data is not seasonally adjusted.

Distressed Sales The second graph shows the percent of REO, short sales and conventional sales. The percent of short sales is now at a high for this brief series.

In June, 62.4% of all resales (single family homes and condos) were distressed sales.

The percent of REOs has been generally declining (seasonally there are a larger percentage of REOs in the winter). Also there appears to be a higher percentage of conventional sales associated with the tax credit.

On financing, 54.6% percent were either all cash (21.3%) or FHA loans (33.3%), 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.

With the tax credit (mostly) over, I expect total sales to decline and the percent of distressed sales (Short and REO) to increase.