THE CALIFORNIA ASSOCIATION OF REALTORS RELEASED THE RESULTS of its April pending and distressed property sales survey recently, and the news for homeowners remains good throughout California, and in particular the Bay Area.

Distressed property sales are defined as homes that sold either through a bank-owned or short-sale process. In other words, these homes were underwater and were sold at a loss to the lender.

Distressed property sales are down more than 50 percent from a year ago, when they represented more than 24 percent of homes sold. Solano County continues to improve, reporting only 14 percent of homes sold as distressed — a significant improvement over April 2013, when distressed properties represented 43 percent of homes sold in the county.

In fact, Bay Area counties were all in single digits, with San Mateo reporting just 2 percent of sales as distressed properties.

The drop from April to March was largely attributed to a decline in short sale activity. A short sale is a sale where the lender agrees to settle the account for less than the amount owed on the property, resulting in a short payoff of the homeowner’s mortgage. Short sales declined to 5.9 percent of activity in April, down from 6.6 percent in March. This is the lowest level of short-sale activity since April 2008 and nearly a third less than a year ago, when short sales represented 14.7 percent of statewide real estate sales activity.

REO, or bank-owned activity, remained steady in April when compared to the previous month, reflecting only 5.3 percent of sales activity. Certainly 5.3 percent is relatively high — but it is significantly lower than April 2012, when REOs represented 9.4 percent of home sales in the state.

Pending sales in April remained steady, with no appreciable change in activity from March — notable because in recent years pending sales have dropped significantly from March to April.

The march toward a normal housing market seems to be continuing. But there remain issues with tight lending standards and a persistent lack of available homes for sale.

The term “distressed property sale” didn’t exist until 2008, when we started seeing the first casualties of the housing crash. On a statewide basis, 14 percent is still way too high to declare that the crisis is over for all areas of California. Some counties, particularly those in major job growth areas, have returned to normal levels, while those in outlying areas are still recovering.

In my experience, it is evident that the housing market has been in recovery mode since 2012, but there remains a lot of residual pain. Home values have rebounded enough that most homeowners now have positive equity. As time passes, many who lost homes are beginning to once again consider the dream of homeownership. When the data on distressed properties is no longer relevant enough to collect, then we will know that the housing market recovery is complete.

Guy Benjamin (CAL BRE License #01014834, NMLS 887909) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or gbenjamin@rpm-mtg.com.

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