Relatively speaking, one might say that the distressed housing market in California has virtually evaporated. The California Association of Realtors® (C.A.R.) said today that more than two-thirds of home sales in the state five years ago were short sales and bank owned real estate (REO). Those properties now make up only 15.6 percent of the market. The statewide share of equity sales hit a high of 86.4 percent in November 2013 and has been above 80 percent for the past seven months. C.A.R. did not provide figures on what would constitute a distressed/equity split in a "normal" market.
In January 2009, 60 percent of home sales were REO properties while short sales made up another 9.1 percent. Short sales peaked in January 2012 at 25.6 percent but now account for only 9.2 percent of the market while REO sales comprise 6.4 percent. During the same time period, California's median home price has soared more than 64 percent from $249,960 in January 2009 to $410,990 in January 2014.
In some California counties distressed property sales were almost the only market in 2009. In Sacramento County, for example, short and REO sales had an 85.6 percent share. Two counties in the Central Valley, Stanislaus and San Joaquin were over 90 percent. Sacramento now has a distressed market of 19.9 percent and those sales make up about a quarter of transactions in the two other counties. The highest share in January was in Fresno County at 26.3 percent. Of the reporting counties, San Luis Obispo, Orange, Santa Clara, and San Mateo counties held the lowest share of distressed sales in January 2014 at 10.2 percent, 9.5 percent, 7.7 percent, and 6.8 percent, respectively.
"The dramatic drop in the share of distressed sales throughout the state reflects a market that is fully transitioning from the housing downturn," said C.A.R. President Kevin Brown. "Significant home price appreciation over the past five years has lifted the market value of many underwater homes, and as a result, many homeowners have gained significant equity in their homes, resulting in fewer short sales and foreclosures."
