Purva Brown, Alan Greenspan and Johnstradamus have been predicting a real estate recovery as early as 2009, and I believe that we are beginning to see some very definite signs of that in Sacramento County.  Prices are still falling, but more slowly in the last couple of months.  More importantly, unit volume has been steadily increasing.  (See the right hand side of the chart, below).

When we say “unit volume”, all we mean is the number of homes that have sold.  (Perhaps the term “residential units” is handed down to us from the Coneheads).

Here are some unit volume statistics showing that — in terms of sales volume at least — the nadir of the market may have already happened.  (That is, of course, barring further economic collapse, big interest rate hikes, or an invasion of Elbonians). 

• Unit volume has increased steadily for the past four months in a row, after it began to slowly climb five months earlier from the bottom it had reached in October of 2007.
• In May, unit volume was up 64.2% over last May’s volume.
• Unit volume in in Sacramento County in May was the highest it’s been since October of 2005, just a few months after it hit its peak in June of 2005.

 

The Rest Of The Story

The upswing in demand that we’re seeing in Sacramento County is a result of falling prices.  At $248,786, this year’s average home sold for 33.9% less than last year’s average of $376,158.  This May’s median home sold for $225,000, down 34.4% from last year’s median of $343,000.  Sold price per square foot fell 33% during this time.

Heavy demand in May has helped sell off some of the inventory.  Inventory presently is at 8.35 months, down from 9.24 months at the end of April.  (Based on May’s absorption rate of 1703 units, it’s even lower, 5.3 months — seller’s market numbers).  In addition, the rising sales figures helped push the expired to sold ratio down, from 74.1% in May of 2007 to 34.8% in May of 2008.

REO’s continue to account for the bulk of sold homes, at 64.1% of sales in May, followed by non-distressed sales, which accounted for 28.8% of sold homes.  Short sales again eeked out a pathetic, Snidely-Whiplash-makes-the-banks-look-good third place, at 7.2% of sales.   (See Are Short Sales Fake Listings for more on that story).

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