Distressed sales have plunged in the last year, the California Association of Realtors® (C.A.R.) said today, and are now at only about half of the level of one year ago. Equity or non-distressed sales currently account for four out of five home sales in the state after rising for 17 of the last 18 months.
Distressed sales - usually sales of homes held in bank inventories (REO) or short sales - fell to a 17.1 percent share in July compared to 20.1 percent in June and 40.8 percent in July 2012. C.A.R. said that 25 of the 38 counties reporting showed a June to July decrease. In two counties, San Mateo and Santa Clara, distressed homes accounted for only 4 percent of sales.
"The increase in the share of equity sales reflects a market that is fully transitioning from investor purchases of distressed homes to primary home purchases by households. The market continues to improve as more previously underwater homes gain equity due to recent upward movement in prices," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "As a result, we're seeing a significant decline in the supply of short sale and bank-owned properties."
Equity sales increased in July to 82.9 percent of sales from 79.9 percent in June, the highest share since December 2007. By way of contrast, equity sales represented 59 percent of sales one year earlier.
Short sales fell to 11.6 percent, the lowest level since April 2009, from 12.9 percent in June and were at about half their 22.7 percent market share in July of 2012. C.A.R. said that the drop in short sales indicates the statewide price increases are pulling more underwater homes into a positive equity situation.
The REO share also continued to fall, dropping to single-digits for the fourth straight month. REOs made up only 5 percent of all sales in July, down from 6.6 percent in June and from 17.7 percent in July 2012. The July 2013 figure was the lowest since September 2007.
In other California real estate news, C.A.R. said pending home sales were flat in July. The Pending Home Sales Index (PHSI) which is a leading indicator of sales based on signed contracts to purchase, fell month-over-month by 3 basis points to 114. The PHSI was at 115.8 in July 2012.
Inventories remained tight. The July Unsold Inventory Index for equity sales edged down from 3.1 months in June to 3 months in July while the supply of REOs inched up from 1.8 months in June to 2.1 months and the supply of short sales ticked upward from 2.4 months in June to 2.5
