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Monthly Real Estate Market Report – November 2015

January 23, 2016

01.21.2016 As anticipated, the new TILA-RESPA Integrated Disclosure (TRID) regulation, or the Know Before You Owe Rule, has created what should be a temporary drop in sales figures for the month of November 2015. With the new rules in place, there were a significant number of delayed closings to allow time for compliances to be met. These artificially depressed sales are important to track and understand as Realtors®, Brokers and lending institutions get into the swing of the new processes. Keeping the extent of delayed closings in mind, the results of November’s sales should not be used to site a true slowing down of the market. We shall continue to watch the market and how it responds to the new rule, noting when the process smoothes out, bringing closing times back in line to the average time of 30-45 days.

Reviewing the details of month-to-month data, in November there were fewer residential homes (single-family homes and condominiums) sold compared to October, with 27,105 homes sold in November, 22.0% less than the final count of 34,760 homes sold in October. Compared to a year ago, in November 2014 there was a 3.1% decrease in sales. Median prices were up a small amount, by 2.5%, coming in at $415,000 compared to $404,750, the final revised figure for October. An increase in median pricing is not normally seen with such a large drop in the number of sales. This situation points again to delayed closings from the new TRID Rule. It’s probable that the time to adjust to the new compliance requirements has delayed more homes at lower list prices.

With an increase in higher-priced homes selling in November, the median price appears skewed higher. Within the state, 21 of the 26 biggest counties saw an increase in median prices for the month. The largest increase was in Santa Barbara County with a 21.1% rise. Contra Costa saw an 8.2% increase, Monterey County came in with a 6.3% increase and Marin County rose by 4.8%. Reviewing year-over-year median prices, there has been steady growth for California with a 6.4% increase in November 2015 compared to November 2014. This reflects an increase of more than 5% in 18 of the 26 biggest counties of the state. San Francisco County saw the biggest increase for the year at 12.5%, followed closely by Contra Costa County at an 11.7% increase. Merced County’s median prices compared to a year ago increased 11.4%, and Marin County by 11.3%.

Cash sales were another hotspot for November 2015 sales. While we typically see a bit of an increase in cash sales at the end of a year, there was a significant jump of 34.3% compared to November 2014. 30.9% of residential properties sold in California for the month were cash sales. This up almost 10% from the average of 20.7% of sales which has been reported for the last 6 months. There are a variety of reasons for the increase in this type of sale. California’s Real Estate is well perceived as a safer investment for the values that grow, and kept retained. Some of this perception is likely due to circumstances such as increased foreign investment, stock market fluctuations, or the cooling down of Silicon Valley capital funding.

Home foreclosures continue to decline, a positive trend that is holding steady. Foreclosure Notices dropped 16.3% in November, the lowest since 2007. As of November, only 6.7% of homeowners were considered underwater and facing possible foreclosure. This is a significant change, with only 585,000 homes in this position compared to just under 1 million in January 2015. Just 1 in 15 homes face possible foreclosure. This continuing downward trend bodes well for the state, homeowners and residential Real Estate Market overall, and reflects the strong growth we have been experiencing in our economy also.

Even with the skewed sales due to the Know Before You Owe TRID rule now in place, The California Real Estate Market is holding strong and is expected to continue forward alongside our strengthening economy. When you are ready to sell or buy a home, my team and I are ready to help you through the entire process. Our goal is to make your experience both easy and pleasurable. Contact us today at (925) 634-7820, or by email at realestate@cecily.com.

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