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Monday, February 14, 2011

Distressed House Sales: Highest since early 2009 using Sacramento data

by Calculated Risk on 2/14/2011 05:36:00 PM

I've been following the Sacramento market to see the change in mix (conventional, REOs, short sales) in a distressed area. The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009. Here are the statistics.

Distressed Sales Click on graph for larger image in graph gallery.

This graph shows the percent of REO, short sales and conventional sales. There is a seasonal pattern for conventional sales (strong in the spring and summer), and distressed sales happen all year - so the percentage of distressed sales increases every winter. The tax credits might have also boosted conventional sales in 2009 and early 2010.

Note: Prior to June 2009, it is unclear if short sales were included as REO or as "conventional" - or some of both.

In January 2011, 73.1% of all resales (single family homes and condos) were distressed sales. This is the highest level of distressed sales since Sacramento started breaking out short sales, and might be the highest since February 2009.

And a high level of distressed sales suggests falling prices. And this isn't just happening in Sacramento. Housing economist Tom Lawler noted today:

"January is seasonally the weakest month for home sales (closings); distressed share of sales went up in many areas last month, suggesting that repeat transactions HPIs in early 2011 will show weakness."
My guess is both the Case-Shiller and CoreLogic repeat sales indexes will fall to post-bubble lows once the January data is released.