by Calculated Risk on 10/10/2014 12:00:00 PM

About 5 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 few years, 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 September 2014, 11.1% of all resales were distressed sales. This was down from 11.7% last month, and down from 16.0% in September 2013. This is the post-bubble low.

The percentage of REOs was at 6.0%, and the percentage of short sales was 5.1%.

Here are the statistics for September.

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 that started in 2012 (blue) as the percentage of distressed sales declined sharply.

Look at all that BLUE!

Active Listing Inventory for single family homes increased 50.9% year-over-year (YoY) in September.  Although this was a large YoY increase, the YoY increases have been trending down after peaking close to 100%. 

Cash buyers accounted for 19.4% of all sales, down from 23.6% in September 2013, and down from 20.2% 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 0.6% from September 2013, and conventional equity sales were up 5.2% compared to the same month last year.

Summary: Distressed sales down sharply (at post bubble low), cash buyers down significantly, and inventory up significantly (but increases slowing).   This is what we'd expect to see in a healing market.  As I've noted before, we are seeing a similar pattern in other distressed areas.