Distressed Sales Plunge Below 20 Percent in California

Distressed sales have plunged inrnthe last year, the California Association of Realtors® (C.A.R.) said today, andrnare now at only about half of the level of one year ago.  Equity or non-distressed sales currently accountrnfor four out of five home sales in the state after rising for 17 of the last 18rnmonths.</p

Distressed sales – usually salesrnof homes held in bank inventories (REO) or short sales – fell to a 17.1 percentrnshare in July compared to 20.1 percent in June and 40.8 percent in Julyrn2012.  C.A.R. said that 25 of the 38 countiesrnreporting showed a June to July decrease. rnIn two counties, San Mateo and Santa Clara, distressed homes accountedrnfor only 4 percent of sales.</p

“Thernincrease in the share of equity sales reflects a market that is fullyrntransitioning from investor purchases of distressed homes to primary homernpurchases by households.  The market continues to improve as morernpreviously underwater homes gain equity due to recent upward movement inrnprices,” said C.A.R. Vice President and Chief Economist LesliernAppleton-Young.  “As a result, we’re seeing a significant decline in thernsupply of short sale and bank-owned properties.”  </p

Equityrnsales increased in July to 82.9 percent of sales from 79.9 percent in June, thernhighest share since December 2007.  Byrnway of contrast, equity sales represented 59 percent of sales one year earlier.</p

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Shortrnsales fell to 11.6 percent, the lowest level since April 2009, from 12.9rnpercent in June and were at about half their 22.7 percent market share in Julyrnof 2012.  C.A.R. said that the drop inrnshort sales indicates the statewide price increases are pulling more underwaterrnhomes into a positive equity situation.  </p

The REO share also continued tornfall, dropping to single-digits for the fourth straight month.  REOs madernup only 5 percent of all sales in July, down from 6.6 percent in June and fromrn17.7 percent in July 2012.  The July 2013 figure was the lowest since Septemberrn2007.</p

In other California real estaternnews, C.A.R. said pending home sales were flat in July.  The Pending Home Sales Index (PHSI) which isrna leading indicator of sales based on signed contracts to purchase, fellrnmonth-over-month by 3 basis points to 114. rnThe PHSI was at 115.8 in July 2012.</p

Inventories remained tight.  The July Unsold Inventory Index for equityrnsales edged down from 3.1 months in June to 3 months in July while the supplyrnof REOs inched up from 1.8 months in June to 2.1 months and the supply of shortrnsales ticked upward from 2.4 months in June to 2.5 </p

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