January 15, 2016 Ben Lane
After November 2015 turned out to be California’s worst home sales performance for the month since 2007, several observers were quick to point the effect of the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule in October as a significant headwind that California couldn’t overcome any time soon.
December proved that wrong.
As expected, the weaker-than-expected sales figures of November 2015 were thanks in large part to TRID.
According to a new report from the California Association of Realtors, existing, single-family home sales jumped 9.6% in the month of December, as many sales that were pushed out of November thanks to TRID-related delays closed in December.
And according to Ziggy Zicarelli, the president of the California Association of Realtors, December’s jump in home sales in December wasn’t just large, it was historically large.
“As we speculated, sales that were delayed in November because of The Consumer Financial Protection Bureau’s new loan disclosure rules closed in December instead, which led to the greatest monthly sales increase in nearly five years,” Zicarelli said. “Sales increased across the board in all price segments in December, but improvement in the sub-$500,000 market was more pronounced as many homes affected by the new loan disclosures were priced under the conforming loan limit.”
Overall, CAR’s report showed that existing, single-family home sales totaled 405,530 in December on a seasonally adjusted annualized rate, up 9.6% from November and up 10.7% from December 2014.
The month-over-month increase in sales was the largest since January 2011, and the year-to-year increase was the largest since July 2015, CAR’s report showed.
Additionally, CAR’s report showed that December’s sales of condos and townhomes were up 25.1% from November and were 10.2% higher than a year ago at the same time.
While there were more sales closed in December, the median price of an existing, single-family detached California home also rose by a historic margin.
According to CAR’s report, the median price increased 2.6% in December to $489,310 from $477,060 in November.
December’s median price was 8% above than the revised $453,270 recorded in December 2014.
The year-to-year price gain was the largest since August 2014, CAR said.
And thanks to the increase in closed sales in the month of December, the number of active listings also dropped from both the previous month and year.
According to CAR’s report, active listings at the statewide level dropped 11.7% from November and 7.9% from December 2014.
At the regional level, total active listings continued to decline from the previous year in Southern California, Central Valley, and the San Francisco Bay Area, dropping 9.6%, 7.6%, and 5.2%, respectively, CAR’s report showed.
“In line with our forecast, California’s housing market experienced strong sales and price growth throughout last year, with the median price increasing 6.2% for the year as a whole to reach $474,420 in 2015,” said CAR Vice President and Chief Economist Leslie Appleton-Young. “Looking forward, we expect the foundation for the housing market to remain strong throughout the year, with moderate increases in home sales and prices, but headwinds of tight housing supply and low affordability will remain a challenge.”