Tuesday, May 14, 2013

Sacramento: Conventional Sales over 68% of Housing Market in April, Highest percentage in Years

by Calculated Risk on 5/14/2013 03:24:00 PM

Several years ago I started following the Sacramento market to look for changes in the mix of houses sold (conventional, REOs, and short sales). For some time, not much changed. But over the last 2 years we've seen some significant changes with a dramatic shift from foreclosures (REO: lender Real Estate Owned) to short sales, and the percentage of total distressed sales declining sharply.

This data suggests healing in the Sacramento market.  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 April 2013, 31.9% of all resales (single family homes) were distressed sales. This was down from 37.5% last month, and down from 60.7% in April 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 decreased to 8.5%, and the percentage of short sales decreased to 23.3%.

Here are the statistics.

Distressed Sales Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales.

There has been a sharp increase in conventional sales recently, and there were almost three times as many short sales as REO sales in April. 

Active Listing Inventory for single family homes declined 10.3% from last April (the decline in inventory is slowing).  Cash buyers accounted for 37.2% of all sales (frequently investors).

Total sales were down 5% from April 2012, but conventional sales were up 64% 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.

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 housing market.