Distressed Sales Fall Under 25 Percent in California

In April 2012 distressed properties accounted for 45.8 percent of home sales in California the states Association of Realtors® said Wednesday, but last month that share dropped to 24.4 percent and was down 3.5 points compared to March.  There was of course a corresponding rise in the share of equity sales.  The California Association of Realtors (C.A.R.) said that the share of short sales declined from 21.1 percent a year earlier to 14.8 percent as rising prices lifted more homeowners out of a negative equity position.  Sales of bank owned real estate (REO) dropped into single digits (9.2 percent) for the first time in more than five years.

The decline in distressed sales was evident throughout the state with at least seven of the state's 58 counties registering distressed sales in the single or low double digits.  Distressed sales did increase from March in seven of the 36 counties for which the Association provided information, but most increases were only one or two percentage points. 

Inventories remained tight.  There was an unsold inventory of REO which was the equivalent of a 1.8 month supply in March and that dropped to 1.7 months in April.  The inventory of short sales was unchanged at 2.7 months and the index for equity sales was 2.9 months compared to 3.0 months in the prior month.

C.A.R.'s Pending Home Sales Index (PHSI) decreased 3.7 percent from a revised 126.5 in March to 121.7 in April, based on signed contracts.  Pending sales were down 3.9 percent from the 126.7 index recorded in April 2012.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.