by Calculated Risk on 6/11/2012 05:33:00 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.

So far there has been a shift from REO to short sales, and the percentage of distressed sales has been declining year-over-year. This data would suggest improvement, however we do not know the impact of the mortgage settlement yet (the court signed off on the agreement in early April).

In May 2012, 58.3% of all resales (single family homes and condos) were distressed sales. This was down from 60.7% last month, and down from 65.6% in May 2011. This is lowest level since the Sacramento Realtors started tracking distressed sales, but 58% distressed is still extremely high!

Here are the statistics.

Click on graph for larger image.

This graph shows the percent of REO sales, short sales and conventional sales. 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 a sharp increase in conventional sales, and there were more short sales than REO sales in May for the second consecutive month.

Total sales were up 9.0% compared to May 2011, and conventional sales were up 32% year-over-year. Active Listing Inventory for single family homes declined 65.6% from last May, and total inventory, including "short sale contingent", was off 36% year-over-year.

Cash buyers accounted for 31.5% of all sales (frequently investors), and median prices were down 1.8% from last May.

This appears to be a little progress, although the market is still in distress - and the impact of the mortgage settlement is still unknown.

We are seeing similar patterns in other distressed areas.