by Calculated Risk on 9/11/2012 06:21:00 PM

I've been following the Sacramento market to look for changes in the mix of house sales in a distressed area over time (conventional, REOs, and short sales). The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

Recently there has been a dramatic shift from REO to short sales, and the percentage of distressed sales has been declining. This data would suggest some improvement although the percent of distressed sales is still very high.

In August 2012, 52.0% of all resales (single family homes and condos) were distressed sales. This was down from 54.4% last month, and down from 62.0% in August 2011. The percentage of REOs fell to 16.6%, the lowest since the Sacramento Realtors started tracking the data and the percentage of short sales increased to 35.4%, the highest percentage recorded.

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales. Usually there is a seasonal pattern for conventional sales (stronger in the spring and summer), and distressed sales happen all year - so the percentage of distressed sales decreases every summer and the increases in the fall and winter.

There has been an increase in conventional sales this year, and there were twice as many short sales as REO sales in August. The gap between short sales and REO sales is increasing.

Total sales were unchanged from August 2011 (same pace as last year even with fewer foreclosures).

Active Listing Inventory for single family homes declined 62.0% from last August, although listings were up 10.6% in August (from July).

Cash buyers accounted for 33.1% of all sales (frequently investors), and median prices were up 12.0% from last August.

This seems to be moving in the right direction, although the market is still in distress.

We are seeing a similar pattern in other distressed areas to more conventional sales, and a shift from REO to short sales,.