by Calculated Risk on 7/10/2014 01:49:00 PM

Several years ago I started following the Sacramento market to look for changes in the mix of houses sold (equity, 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 and 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 June 2014, 13.3% of all resales (single family homes) were distressed sales. This was down from 14.7% last month, and down from 26.5% in June 2013. This is the post-bubble low.

The percentage of REOs was at 7.2%, and the percentage of short sales was 6.1%.

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 over the last 2+ years (blue). 

Active Listing Inventory for single family homes increased 91.0% year-over-year in June. 

Cash buyers accounted for 19.8% of all sales, down from 29.9% in June 2013, and down from 20.5% last month (frequently investors).  This has been trending down, and it appears investors are becoming much less of a factor in Sacramento.

Total sales were down 3.7% from June 2013, but conventional equity sales were up 13.5% 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.

Summary: Distressed sales down sharply (at post bubble low), Cash buyers down significantly, normal equity sales up 13.5% year-over-year, inventory up significantly (price increases should slow).  If I was "wishcasting", this is what I'd like to see!

As I've noted before, we are seeing a similar pattern in other distressed areas.