by Calculated Risk on 10/15/2012 06:54:00 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 September 2012, 50.8% of all resales (single family homes and condos) were distressed sales. This was down from 52.0% last month, and down from 64.0% in September 2011. The percentage of REOs fell to 15.4%, 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.

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

Total sales were down 10% from September 2011, however conventional sales were up 23% compared to the same month last year. This is exactly what we expect to see in an improving distressed market - some decline in overall sales as distressed sales decline, but an increase in conventional sales.

Active Listing Inventory for single family homes declined 63.4% from last September, and listings were down 11.1% in September compared to August.

Cash buyers accounted for 35.9% of all sales (frequently investors), and median prices were up 9.6%% from last September.

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.