by Calculated Risk on 2/19/2014 08:24:00 PM

First an update on Sacramento: 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 a long 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, although some of this is due to investor buying.  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 January 2014, 19.5% of all resales (single family homes) were distressed sales. This was up from 18.8% last month, and down from 44.5% in January 2013.

The percentage of REOs was at 8.1%, and the percentage of short sales decreased to 11.5%.  The increase in December and January was seasonal (happens at the end of every year).

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 a sharp increase in conventional sales recently (blue). 

Active Listing Inventory for single family homes increased 96.3% year-over-year in January. 

Cash buyers accounted for 26.6% of all sales, down from 37.4% a year ago (frequently investors).  This has been trending down, and it appears investors are becoming less of a factor in Sacramento.

Total sales were down 24% from January 2013, but equity sales (non-distressed) were up 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 increasing.

As I've noted before, we are seeing a similar pattern in other distressed areas.  This suggests what will happen in other areas: 1) Flat or declining overall existing home sales, 2) but increasing conventional (equity) sales,  3) Less investor buying, 4) more inventory, and 5) slower price increases.

Thursday:
• At 8:30 AM ET, the initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 335 thousand from 339 thousand.

• Also at 8:30 AM, the Consumer Price Index for January. The consensus is for a 0.1% increase in CPI in January and for core CPI to increase 0.1%.

• At 10:00 AM, the Philly Fed manufacturing survey for February. The consensus is for a reading of 10.0, up from 9.4 last month (above zero indicates expansion).